Altria Announces Intent to Sell a Portion of its Investment in Anheuser-Busch InBev

Rhea-AI Summary

Altria Group, Inc. announced its intent to sell a portion of its investment in Anheuser-Busch InBev SA/NA through a global secondary offering. Altria plans to sell 35 million ABI ordinary shares, representing approximately 10% ownership. The proceeds will be used for additional share repurchases of Altria's common stock.

Insights

Financial Analyst

Altria's decision to divest a portion of its stake in Anheuser-Busch InBev represents a strategic reallocation of assets that is likely to have a material impact on both companies' liquidity and market capitalization. The sale of 35 million shares, coupled with the additional option for underwriters to purchase up to 5.25 million shares, could lead to a dilution of existing shareholders' equity in ABI. However, the concurrent $200 million share repurchase by ABI may partially offset this dilution.

From a financial perspective, the transaction's timing and structure suggest Altria is capitalizing on market conditions to optimize its investment returns. The 180-day lockup period implies a short-term commitment to ABI, stabilizing the market's response to the sale. Investors should monitor Altria's share price following the announcement, as the intended use of proceeds for share repurchases may signal confidence in the company's intrinsic value and a potential increase in earnings per share.

Market Research Analyst

The secondary offering of ABI shares by Altria could indicate a broader strategy to focus on core operations by divesting non-core assets. This move may be well-received by investors who prefer companies with a more focused business model. Furthermore, the transaction reveals Altria's assessment of ABI's market performance and its own capital allocation strategy. The market's response to such a large offering will provide insights into investor sentiment towards both Altria and the beverage industry.

It is noteworthy that Altria's CEO highlighted the historical returns of the ABI investment, emphasizing the long-term value creation from this asset. This statement, combined with the ongoing confidence in ABI's management and brand strength, suggests a nuanced divestiture rather than a complete exit, which might reassure stakeholders about the fundamental health of ABI.

Corporate Strategy Expert

Altria's partial divestment from ABI aligns with a strategic shift that many corporations undertake to optimize their asset portfolio. The use of proceeds for share repurchases reflects a strategic choice to invest in the company's own stock, potentially indicating a belief that Altria's shares are undervalued. This could be a strategic move to enhance shareholder value in the short term.

Additionally, the lockup agreement with the lead underwriter suggests a calculated approach to ensure stability in Altria's stock post-transaction. Stakeholders should consider the long-term implications of this divestiture, as it may signal a shift in Altria's investment strategy, focusing more on its core tobacco business and less on diversification through holdings in other industries.

RICHMOND, Va.--(BUSINESS WIRE)-- Altria Group, Inc. (Altria) (NYSE: MO) today announced its intent to sell a portion of its investment in Anheuser-Busch InBev SA/NA (ABI) (NYSE: BUD) (Euronext: ABI) (MEXBOL: ANB) (JSE: ANH) through a global secondary offering (offering) comprised of a public offering of ABI ordinary shares represented by American depositary shares (ADS) in the United States, a public offering of ABI ordinary shares in the United States, a concurrent private placement of ABI ordinary shares in the European Economic Area and the United Kingdom and an offering of ABI ordinary shares, including ABI ordinary shares represented by ADSs, in other countries outside the United States. In addition, ABI has agreed to repurchase $200 million of ordinary shares directly from Altria, concurrently with, and conditional on, completion of the offering.

Altria currently holds approximately 197 million shares of ABI, representing approximately 10% ownership. Altria, as the selling shareholder, is offering 35 million of ABI’s ordinary shares. In connection with the offering, Altria expects to grant the underwriters an option to purchase up to 5.25 million additional ABI shares owned by Altria, exercisable within 30 days following the pricing of the offering. In addition, we have agreed to a 180-day lockup with the lead underwriter for our remaining ABI shares.

We expect to use the proceeds for additional share repurchases of our common stock. Future share repurchases remain subject to the discretion of our Board of Directors (Board).

“As good stewards of shareholder capital, we consistently review options to unlock the value of our ABI investment, and we believe this is an opportunistic transaction that realizes a portion of the substantial return on our long-term investment,” said Billy Gifford, Altria’s Chief Executive Officer. “Over the decades of our ownership, the beer investment has provided significant income and cash returns and supported our strong balance sheet. Our continued investment reflects ongoing confidence in ABI’s long-term strategies, premium global brands and experienced management team.”

The offering and the partial sale of our investment in ABI have been approved by our Board.

ABI has filed a registration statement (including a prospectus) with the U.S. Securities and Exchange Commission (SEC) for the offering to which this release relates. Before you invest, you should read the prospectus in that registration statement and other documents ABI has filed with the SEC, including the preliminary prospectus supplement dated March 13, 2024, for more complete information about ABI and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, any underwriter or any dealer participating in the offering will arrange to send you the prospectus and the prospectus supplement, when available, if you request them by contacting: Morgan Stanley & Co. LLC, 180 Varick Street, 2nd Floor, New York, NY 10014, Attn: Prospectus Department; or J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, by telephone at 866-803-9204 or by email at prospectus-eq_fi@jpmchase.com.

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any offer or sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Morgan Stanley is acting as the lead underwriter for the proposed offering. J.P. Morgan is also acting as an active underwriter for the proposed offering.

Forward-Looking and Cautionary Statements

This release contains certain forward-looking statements with respect to the offering, which are subject to various risks and uncertainties. These forward-looking statements relate to, among other things, the anticipated completion of the offering and our intended use of proceeds. Factors that may cause actual results to differ include prevailing economic, market or business conditions or changes in such conditions. Other risk factors are detailed from time to time in our publicly filed reports, including our Annual Report on Form 10-K for the year ended December 31, 2023. These forward-looking statements speak only as of the date of this release. We assume no obligations to provide any revisions to, or update, any forward-looking statements contained in or implied by this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240313927448/en/

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Source: Altria Group, Inc.

FAQ

What did Altria Group, Inc. announce regarding its investment in Anheuser-Busch InBev SA/NA?

Altria Group, Inc. announced its intent to sell a portion of its investment in Anheuser-Busch InBev SA/NA through a global secondary offering.

How many ABI ordinary shares is Altria planning to sell?

Altria plans to sell 35 million ABI ordinary shares, representing approximately 10% ownership.

What is the intended use of the proceeds from the sale of ABI shares?

The proceeds from the sale of ABI shares will be used for additional share repurchases of Altria's common stock.