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BAT not to buy UTI's stake in ITC

British American Tobacco Plc on Friday denied speculation in Indian newspapers that it planned to raise its stake in associate ITC Ltd, saying it was comfortable with its holding in India's largest cigarette maker.

BAT, the world's second-largest cigarette firm, said in a statement it had not approached the Unit Trust of India to buy the state-controlled fund manager's shares in ITC.

"We confirm that we have not approached UTI, either directly or through intermediaries or third parties, with a view to purchasing their shares in ITC," said BAT, which holds a 31.7 per cent stake in ITC.

"Any third party purporting to represent British American Tobacco is unauthorised to do so. We also confirm that we have not received any approach from UTI," it said, adding that it had been asked by the Indian company to clarify the matter.

Shares in the Indian company, a heavyweight in the Bombay Stock Exchange's 30-share index, had risen 3.7 per cent on Thursday after an Indian newspaper said that BAT was tying up with a local business house to buy UTI's holding in ITC.

There has been speculation that cash-strapped UTI, India's largest fund manager, has been looking to sell large stakes it owns in companies to strategic buyers.

UTI and other Indian financial institutions own a 36.6 per cent stake in ITC, which accounts for nearly seven per cent of the Bombay index.

ITC's shares closed little changed at Rs 699.50 ($14) on Friday, ahead of BAT's statement.

The Indian business is a small part of BAT's global operations.

The tobacco giant also said it was aware of the Indian government restrictions on foreign ownership in local tobacco companies, but did not give details.

Foreign companies can directly own a maximum of 49 per cent in Indian tobacco firms.

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