Table of Content
Brief Pointers:
- SUUTI Stake: Approximately 7.82% in ITC.
- BAT’s Plan: Selling up to 3.5% of its ITC stake.
- Government’s Stand: No immediate divestment of SUUTI’s stake in ITC.
Date: March 14, 2024
The Indian government has quashed rumours and speculation by affirming that it has no immediate plans to sell its stake in ITC. The stake in question is held through the Specified Undertaking of the Unit Trust of India (SUUTI), which currently owns approximately 7.82% of the diversified conglomerate ITC.
Background
- SUUTI, a government-owned entity, has been a significant shareholder in ITC.
- The last time SUUTI reduced its stake in ITC was in February 2017, when it sold 2% equity via a block deal at a price of Rs 291.95 per share.
- The recent buzz around ITC’s ownership stemmed from British multinational BAT Plc’s announcement that it plans to sell up to 3.5% of its stake in ITC to institutional investors through a block trade.
BAT’s Move and Government’s Response
- British American Tobacco Plc (BAT), which has a longstanding relationship with ITC, intends to reduce its stake from 29% to 25.5%.
- The proposed block trade involves selling 43,68,51,457 ordinary shares in ITC, with an estimated value of Rs 17,659.72 crore based on Tuesday’s closing price.
- The net proceeds from this sale will be used by BAT to buy back its own shares over the next few years.
- The government’s stance remains clear: no divestment of SUUTI’s stake in ITC at this juncture.
In summary, while BAT’s move may impact ITC’s ownership structure, the government’s commitment to retaining its stake through SUUTI provides stability and reassurance to investors and the market at large.
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