British American Tobacco investors call on new chief to launch ‘aggressive’ share buybacks
Investors in British American Tobacco (BAT) are reportedly calling on its new chief executive to launch an “aggressive” share buyback programme to accelerate the return of capital to shareholders and boost the cigarette maker’s dwindling share price, which has fallen 18 per cent since the start of this year.
BAT launched a £2bn stock repurchase programme in 2022, but chose not to renew it this year.
Rajiv Jain, whose US-based investment firm GQG Partners is a top-five shareholder in BAT, however, called on new CEO Tadeu Marroco to better communicate the company’s investment case to the market and “buy back stock in a much more aggressive manner.”
“They’re not telling the story of the pricing power that they have. They need to get the story out right, which is that the business is in good shape, good upside, and the free cash flow generation is strong . . . but the free cash flow has to be given back to shareholders. They should be buying stock hand over fist,” Jain told the Financial Times.
The shareholder pressure comes after the sudden replacement of its chief Jack Bowels with Marroco, the firm’s former finance director.
While the company gave no reason for his Bowels departure, sources told the Financial Times that it could be linked to the $635m (£512m) fine BAT paid out to US authorities over its decision to supply cigarettes to North Korea in breach of economic sanctions. Bowels, who has headed the company since 2019, has not been blamed for any wrongdoing in the case.
The sources also suggested that BAT’s slow transition to vapes and heated tobacco goods, which still only account for a tenth of the businesses revenues despite their increasing popularity, could be another reason behind his departure.
BAT wasn’t immediately available to comment.