According to a report from the UK's Financial Times, Tadeu Marroco, the CEO of British American Tobacco, has denied the idea of moving the company's listing from London to New York, calling it a "distraction." Previously, the top ten shareholders who were pushing for this change have sold their stakes in the tobacco company.
Maroko told the Financial Times that the change of listing venue "will cause a lot of disruption internally," and he is "uncertain if its benefits are as obvious as some people suggest.
Last year, Rajiv Jain, Chairman and Chief Investment Officer of the US investment group GQG Partners with $105 billion in assets, urged British American Tobacco to switch its primary listing and clashed with management over the decision to suspend the company's stock buyback program.
According to two sources familiar with the matter, GQG sold its 4% stake in British American Tobacco last July because they refused to move and leverage the larger pool of capital in the US, particularly in tobacco stocks. In Europe, an investment environment dominated by ESG considerations means that almost no capital is willing to invest in the tobacco industry.
When asked whether he would consider changing the listing location during his tenure, Maroko said, "I believe we should not focus on this issue during this period.
He added that there are "many other things" he needs to do, including income in the United States and new products. "There is no indication that... going to the United States is a certainty."
He acknowledged that the London capital market is working hard to attract and retain listed companies, but he mentioned the advantages of staying in the UK for investors. Companies that have already moved their main listing venues to the United States include building materials group CRH, packaging company Smurfit Kappa, and gambling group Flutter.
Marroco stated, "If you hold shares in a British (listed) company and are overseas, you do not have to pay withholding tax on dividends, unlike in the United States."
He said, "I hope that within 10 years, we no longer have to have these discussions." "The reason why there is such a high level of emotions today is due to the frustration caused by some people leaving."
For investors, the main reason they are attracted to invest in tobacco stocks is the capital return from dividends and stock buybacks. One of the biggest active investors in British American Tobacco is Spring Mountain Investments, which is an investment vehicle of Kenneth Dart, a billionaire from the Cayman Islands and one of the world's largest foam cup manufacturers.
British American Tobacco announced this month that it will use the proceeds from the sale of a portion of its shares in Indian conglomerate ITC for £1.7 billion to restart its stock buyback program, starting with a £700 million buyback this year.
Marroco stated, "For me, the most important thing is the restart of repurchases, which should be a consistent feature of our capital allocation."
British American Tobacco is facing challenges in reversing the decline in tobacco sales in the United States, its largest market. This is due to people turning to cheaper brands and alternative tobacco products, in which the company is lagging behind the highly successful PMI, whose IQOS heated tobacco product has been very successful.
British American Tobacco's goal is to have 50% of its revenue come from alternative products by 2035, such as its Vuse e-cigarette and Glo heated tobacco devices.
Marroco acknowledged that English-American Tobacco "started late in the heated tobacco products field," but he stated that due to the company's market share in the US, they have the ability to catch up. "We have a large business in the US that can be used to sell (new products)."
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