NEW DELHI: ITC shares fell over 5% in early trade on Wednesday following reports that British American Tobacco (BAT), its largest shareholder, is set to sell a 2.3% stake in the company through a major block deal worth over Rs 11,600 crore ($1.4 billion).The stock dropped 4.33% to Rs 415.10 on the BSE and fell 4.81% to Rs 413 on the NSE, making it the biggest loser among BSE Sensex stocks.According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “BAT’s decision to sell 2.3 per cent stake in ITC will keep the stock subdued.”The stake sale comes amid BAT’s push to increase financial flexibility, reduce debt, and boost its share buyback program.

The deal, carried out via BAT’s arm Tobacco Manufacturers (India) Ltd, will reduce BAT’s holding in ITC from 25.44% to 23.1%. The offer is priced at a floor of Rs 400 per share—about a 7.8% discount to ITC’s closing price on May 27.Following the transaction, the Indian government, through public sector insurers and SUUTI, will become the largest shareholder group in ITC with a 26.5% stake.Equity benchmark indices Sensex and Nifty fell in early trade, pulled down by ITC shares following reports of a stake sale.The BSE Sensex fell 200 points to 81,351.31 and the Nifty slipped 61 points to 24,765 in early trade, dragged by declines in ITC and other heavyweights like Reliance, Maruti, and Titan.BAT is in the multi-category consumer goods business. Its strategic portfolio comprises global cigarette brands and a growing range of nicotine and smokeless tobacco products, including vapour brand Vuse; heated product brand ‘glo’ and Velo, a modern oral (nicotine pouch) brand.