Tobacco giant set for £700m buyback

BRITISH American Tobacco is launching a share buyback for the first time in two years as it sells parts of its stake in India’s biggest cigarette firm.

The maker of Dunhill is selling around 4.5pc – or roughly 436.9m shares – of its 30pc holding in ITC.

The FTSE 100 tobacco group will use the proceeds of the sale to buy back BAT shares between now and December 2025, starting with £700m this year.

This will be the first time BAT has launched a buyback since 2022 and sent shares up 2pc yesterday.

It has owned a stake in ITC for over 100 years and the shareholding has been subjected to numerous regulatory restrictions.

Last month BAT signalled it was in talks about offloading parts of its £15bn stake in ITC. BAT chief executive Tadeu Marroco said the move would offer the ‘opportunity to release and reallocate some capital’ to shareholders.

The company, which also owns Lucky Strike and Camel, last put in place a £2bn share repurchase programme in February 2022 and decided not to renew it last year.

Under the plans, BAT will retain a 25.5pc stake in ITC.

And Owen Bennett, analyst at Jefferies, said the move signals that BAT is hoping to cash in on booming Indian tobacco market that rivals can no longer access because of the Government introducing limits on foreign direct investment in tobacco.

The industry is facing huge changes as the Government pushes ahead with plans to introduce a tax on vaping and increasing tobacco duty from October 2026. Rival Imperial Brands has an ongoing £1.1bn share buyback scheme, while New York listed Altria announced an £800m buyback last month.