British American Tobacco set for £700m buyback as it sells parts of its stake in Indian cigarette giant

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 Dunhill maker is selling about 4.5 percent (or about 436.9 million shares) of its 30 percent stake in ITC.

The FTSE 100 tobacco group will use the proceeds from 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 2 percent yesterday.

It has held a stake in ITC for more than 100 years and that stake has been subject to numerous regulatory restrictions.

Last month, BAT said it was in talks to offload parts of its £15bn stake in ITC. BAT CEO 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 implemented a £2bn share buyback program in February 2022 and decided not to renew it last year.

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

And Jefferies analyst Owen Bennett said the move indicates BAT hopes to capitalize on the booming Indian tobacco market that its rivals can no longer access as the government introduces limits on foreign direct investment in tobacco.

The industry faces huge changes as the Government presses ahead with its plans to introduce a tax on vaping and increase duties on tobacco from October 2026.

Rival Imperial Brands has a £1.1bn share buyback plan underway, while New York-listed Altria announced an £800m buyback last month.