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BAT To Buy Back £700m Shares In 2024 After ITC Share Sale

By Reuters
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BAT To Buy Back £700m Shares In 2024 After ITC Share Sale

British American Tobacco said the company would buy back £700 million (€819.1 million) worth of shares this year after selling down its stake in India's ITC.

BAT's lack of share buybacks has put downward pressure on its stock since it disappointed the market by halting them last year. It said at the time it wanted to focus on reducing debt and investing in new products.

Shareholders also put pressure on BAT to reduce its stake in Indian conglomerate ITC to help it reduce its debt to its target range and to resume buybacks sooner.

Its shares rose around 3.5% on 12 March, extending gains made a day earlier when news of an imminent ITC stake sale broke.

BAT said it would dispose of up to 437 million ordinary shares in ITC to institutional investors via an accelerated book build, cutting the Dunhill cigarette maker's shareholding to about 25.5% from about 29%.

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The term sheet showed the company would sell the shares for 384-400.25 rupees per share, valuing the sale at $2 billion.

'A Sustainable Buyback'

"With this transaction BAT can accelerate the start of a sustainable buyback," CEO Tadeu Marroco said, adding the company's remaining stake in ITC would continue to generate value for shareholders.

The company plans to buy back shares over a period ending December 2025, it said in a statement, starting with some £700 million (€819.1 million) worth in 2024.

'Sustainable share buybacks' would now form one of four elements of its capital allocation plan, it continued, alongside reducing its net debt to within a new range of 2-2.5 times adjusted EBITDA.

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Its previous target range was 2-3 times.

In february, the company forecast low-single digit organic revenue growth, adding it expected a slow recovery in the United States economy.

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