British American Tobacco PLC (LSE:BATS) said it bagged roughly 166.9 billion Indian rupees, or £1.5 billion, from selling a portion of its stake in Indian consumer goods conglomerate ITC.
In a block trade it announced yesterday, the cigarette maker sold around a 3.5% stake in a company it has been invested in for over a century.
As promised, BAT confirmed that it intends to use the net proceeds in a share buyback over the next two years, starting with £700 million this year.
"This will enable the allocation of operating cashflow to fund investment in our transformation, continue to deleverage towards our new target range of 2-2.5x adjusted net debt/adjusted EBITDA, while also maintaining a progressive dividend and supporting a sustainable share buyback," BAT said a statement.
Following the sale, BAT still has a 25.5% stake in the ITC, which was formerly known as Imperial Tobacco India.