British American Tobacco p.l.c. (BAT) is ending 2025 with a familiar cocktail for investors: steady cash returns, aggressive capital allocation, and a tug-of-war between “smoke-free” growth ambitions and regulatory/competitive reality. On 23 December 2025, the company published a fresh “Transaction in Own Shares” update tied to its ongoing buyback programme, a disclosure that lands right as that buyback window reaches its scheduled close. [1]
For market participants tracking BAT from outside the UK—especially those following cross-border flows and India-linked developments (relevant to India’s market ecosystem, including BSE Ltd.)—the recent ITC Hotels stake sale adds an extra subplot: BAT has been actively trimming non-core holdings and directing proceeds toward deleveraging and shareholder returns. [2]
What BAT announced on 23 December 2025: another buyback tranche, shares set for cancellation
In its 23 December 2025 regulatory announcement, BAT said it repurchased 153,353 ordinary shares on 22 December 2025 through Goldman Sachs International under its existing buyback programme. [3]
Key details disclosed:
- Highest price paid:4,241.00p per share
- Lowest price paid:4,194.00p per share
- Volume-weighted average price (VWAP):4,215.6p [4]
BAT also reiterated a key mechanical point that matters more than it sounds: the company intends to cancel the repurchased shares, which reduces the share count over time and can support per-share metrics (all else equal). [5]
After the purchase and intended cancellation, BAT stated it would have:
- 2,179,578,109 ordinary shares in issue (excluding treasury shares) carrying voting rights, and
- 132,988,352 ordinary shares held in treasury. [6]
In plain English: BAT is still steadily shrinking the effective equity base, one filing at a time.
The bigger context: this buyback programme was scheduled to end on 23 December 2025
This “Transaction in Own Shares” update is part of the buyback framework BAT laid out earlier. In an SEC-posted press release dated 9 October 2025, the company said it had entered an agreement with Goldman Sachs International to purchase shares from 16 October 2025 through the close of business on 23 December 2025. [7]
BAT described the programme’s purpose as reducing share capital, with repurchased shares to be cancelled. It also disclosed the maximum number of shares permitted under the authority granted at the company’s 2025 AGM as 220,451,469 shares (net of any shares already bought back under that authority). [8]
So, today’s filing isn’t just another routine line item—it’s arriving at the edge of a defined calendar window. Investors will likely watch for what comes next in 2026, because BAT has already signalled continued buybacks beyond this specific programme period. [9]
BAT share price snapshot and valuation markers investors are watching
BAT’s London-listed shares (ticker BATS) have been trading with the personality of a classic “defensive compounder”: not thrilling in narrative terms, but relentlessly relevant when rates, inflation, and consumer staples positioning come back into fashion.
According to Hargreaves Lansdown data (prices shown as delayed), BAT’s shares were around 4,219p as of the close on 22 December 2025, with an indicated market capitalisation of £91.66 billion, a P/E ratio of 11.58, and a dividend yield of 5.58%. [10]
HL’s page also shows BAT’s one-year performance at +46.54% based on the previous close price—an eye-catching run for a mega-cap tobacco name, and a reminder that “boring” sometimes just means “underappreciated until it isn’t.” [11]
Dividend watch: next quarterly dividend, ex-dividend date, and what BAT has said officially
For income-focused investors, BAT’s dividend schedule is often the main event.
Hargreaves Lansdown’s dividend table lists a declared quarterly dividend of 60.06p, with:
- Ex-dividend date:29 December 2025
- Payment date:4 February 2026 [12]
On BAT’s own investor information pages, the company has also described its approach of paying quarterly instalments, including disclosure that an interim dividend declared for the year ended 31 December 2024 was payable in four equal quarterly instalments (with one instalment scheduled in February 2026). [13]
The headline implication is simple: cash returns remain central to the BAT equity story, with buybacks and dividends working as a two-engine model.
Forecasts and guidance: what BAT said about FY25 delivery and why 2026 is “lower end” territory
The most market-moving “forecast” datapoints in December have come from BAT’s 2025 Full Year Pre-Close Trading Update on 9 December 2025, where it outlined expectations for FY25 and framed how it sees 2026 shaping up. [14]
BAT’s FY25 expectations (as stated in the pre-close update)
BAT said it now expects approximately 2% revenue growth and 2% adjusted profit from operations growth for FY25. [15]
It also guided that “New Category” revenue growth (BAT’s umbrella for vapour, heated products, and modern oral nicotine) was accelerating to double-digit growth in the second half, driving mid-single-digit growth for the full year. [16]
BAT’s 2026 outlook: still within the algorithm, but “lower end”
BAT reiterated its “mid-term growth algorithm” for 2026:
- Revenue: +3% to +5%
- Adjusted profit from operations: +4% to +6%
- Adjusted diluted EPS: +5% to +8%
…but it explicitly said 2026 performance is expected at the lower end of the range. [17]
That “lower end” phrasing matters because it signals less confidence in near-term acceleration—especially relevant in the U.S. vapour market where illicit competition has been distorting legal players’ performance.
Buybacks and balance sheet goals tied to the forecast
BAT also linked its forward outlook to capital allocation, stating it expects to reduce leverage into a target range of 2.0–2.5x by end 2026, and it announced FY26 share buybacks of £1.3 billion. [18]
Why the U.S. vapour market remains the battlefield: illicit competition vs enforcement
If you want the single “why investors argue about BAT” topic in late 2025, it’s this:
Can BAT grow smoke-free profits fast enough while illicit vapes eat the category alive?
In its pre-close statement, BAT said:
- It is seeing early signs that federal and state enforcement actions addressing illicit vapour products are helping support recent improvement in Vuse volumes and revenues in the U.S. [19]
- At the same time, it acknowledged vapour remains heavily impacted by illicit proliferation. [20]
Reuters’ reporting around the 9 December update underscored the market sensitivity: BAT flagged that 2026 revenue and profit would likely sit at the lower end of targets due to stiff U.S. vape competition, and the stock reaction at the time reflected that concern. [21]
In other words, the “smoke-free transition” story is real—but it’s not a smooth upward line. It’s more like trying to climb a mountain while someone keeps moving the mountain.
The India angle: ITC Hotels stake sale and why it matters to BAT shareholders
BAT has also been simplifying its holdings—especially where assets are viewed as non-strategic.
In early December, Reuters reported that BAT planned to offload its stake in India’s ITC Hotels via an accelerated bookbuild, with proceeds intended for deleveraging. [22]
The next day, Reuters reported BAT sold a 9% stake in ITC Hotels for about 38 billion rupees (roughly $425 million), reducing its holding from 15.3% to 6.3%. [23]
Reuters also noted BAT had earlier sold a large stake in ITC Ltd in 2025, reinforcing a broader pattern: reduce non-core exposure and recycle capital toward balance sheet and shareholder returns. [24]
For investors in markets like India—where ITC/ITC Hotels developments are closely watched on domestic exchanges—BAT’s actions can matter even when the BAT equity itself is primarily traded in London (and via ADRs elsewhere). The linkage is strategic and financial rather than operational day-to-day.
“New Categories” vs combustibles: what BAT is betting on (and what still pays the bills)
BAT’s pre-close update frames its momentum in three big areas:
- Combustibles (traditional cigarettes): still described as resilient financially, with strength highlighted in the U.S. and AME (Americas & Europe). [25]
- New Categories: growth acceleration in H2, especially Velo (modern oral) and improving U.S. vapour trends. [26]
- Cash delivery and capital allocation: high operating cash conversion and continued buybacks/dividends alongside deleveraging. [27]
Notably, BAT called modern oral the fastest growing new category and repeatedly highlighted Velo performance, while positioning its innovation pipeline across Vuse (vapour) and glo (heated products). [28]
This matters for stock analysis because the market tends to award higher multiples to “growth + visibility” than to “cash + decline management.” BAT is trying to keep the cash engine running while building enough smoke-free scale to change how the business is valued.
Risks and pressure points investors are weighing right now
BAT itself lists a long menu of forward-looking risks in its disclosures. The themes that keep resurfacing in investor debate include:
- Illicit trade and unregulated competition, particularly in vapour (the U.S. is the headline arena). [29]
- Regulatory outcomes (product authorisations, flavour rules, enforcement intensity, taxation shifts). [30]
- Foreign exchange headwinds, which BAT quantified in parts of its FY25 technical guidance. [31]
- Balance sheet discipline (BAT is targeting leverage reduction into 2026 while maintaining shareholder payouts). [32]
- Litigation and settlement structures, which BAT referenced in its explanations of “adjusted for Canada” presentation in the pre-close materials. [33]
This is the central tension of the BAT stock: it’s designed to pay you while you wait, but what you’re waiting for is a regulatory and consumer behaviour transition that does not move at the speed of a quarterly earnings call.
What to watch next after 23 December 2025
With the buyback programme window (as defined in October’s documentation) reaching its endpoint, the near-term watchlist for BAT shareholders typically clusters around:
- Ongoing buyback strategy into FY26, especially given the company’s stated £1.3bn buyback plan for 2026. [34]
- Dividend mechanics around late December, with the next quarterly dividend’s ex-dividend date and payment date now on the calendar. [35]
- Signals on U.S. vapour enforcement and whether legal brands regain share as enforcement pressure rises. [36]
- Further non-core asset exits or stake reductions, following the ITC Hotels transaction and the earlier ITC-related moves. [37]
Bottom line: BAT’s stock story on 23 December 2025 is “returns first, transition second—under pressure”
Today’s buyback disclosure is a small piece of a much larger chessboard. BAT is still doing what it has promised income-and-value investors for years: pay meaningful cash returns and shrink the share count. [38]
At the same time, BAT’s own guidance and recent reporting make clear that 2026 is not being framed as a breakout year—it’s being framed as a year where targets are still achievable, but likely at the lower end, largely because the “future” categories (especially vapour) face messy, real-world competition from illicit products even as enforcement begins to stir. [39]
That combination—high cash returns + cautious growth outlook + regulatory wildcards—is exactly why BAT remains one of the market’s most debated defensive names: part bond proxy, part consumer staple, part regulatory science experiment, and part capital-allocation machine.
References
1. www.lse.co.uk, 2. www.reuters.com, 3. www.lse.co.uk, 4. www.lse.co.uk, 5. www.lse.co.uk, 6. www.lse.co.uk, 7. www.sec.gov, 8. www.sec.gov, 9. www.bat.com, 10. www.hl.co.uk, 11. www.hl.co.uk, 12. www.hl.co.uk, 13. www.bat.com, 14. www.bat.com, 15. www.bat.com, 16. www.bat.com, 17. www.bat.com, 18. www.bat.com, 19. www.bat.com, 20. www.bat.com, 21. www.reuters.com, 22. www.reuters.com, 23. www.reuters.com, 24. www.reuters.com, 25. www.bat.com, 26. www.bat.com, 27. www.bat.com, 28. www.bat.com, 29. www.bat.com, 30. www.bat.com, 31. www.bat.com, 32. www.bat.com, 33. www.bat.com, 34. www.bat.com, 35. www.hl.co.uk, 36. www.bat.com, 37. www.reuters.com, 38. www.lse.co.uk, 39. www.bat.com
