Altria Enters $2.4 Billion Accelerated Share Repurchase Transactions in Connection with Closing of Offering of Anheuser-Busch InBev Stock

Rhea-AI Summary

Altria Group, Inc. (MO) announces entering accelerated share repurchase transactions to repurchase $2.4 billion of common stock, part of a $3.4 billion share repurchase program. They also closed the sale of 35 million shares of Anheuser-Busch InBev SA/NV (BUD) through a global secondary offering.

Insights

Financial Analyst

The announcement by Altria Group, Inc. regarding the initiation of an accelerated share repurchase (ASR) transaction is a significant move, signaling the company's confidence in its stock and a commitment to returning value to shareholders. The repurchase of $2.4 billion in common stock represents a substantial capital allocation, reflecting a positive outlook by the company's management regarding future cash flows and earnings potential. The ASR allows for an immediate and substantial return of capital, which can be favorable for the stock price in the short term due to the reduction in the number of shares outstanding, potentially increasing earnings per share (EPS).

However, the use of ASRs can be a double-edged sword. While they may provide a short-term boost to the stock price, they also reduce the company's cash reserves, which could be used for other value-creating opportunities such as investments in growth or paying down debt. Investors will need to monitor the company's leverage and liquidity ratios post-transaction to assess the impact on its financial health.

Market Research Analyst

Altria's decision to engage in an ASR is a reflection of broader market practices where companies look to optimize their capital structure and deliver shareholder value. This move is likely to be well-received by the market, as share repurchases are often interpreted as a sign that the company believes its stock is undervalued. It is also indicative of Altria's strategic shift following the sale of a significant portion of its stake in Anheuser-Busch InBev. This divestiture, combined with the ASR, suggests a reallocation of assets that could point to potential new investments or a strategic pivot.

The lockup commitment of 180 days for the remaining ABI shares indicates a short-term limitation on Altria's liquidity, which could impact its ability to react to unforeseen market changes. This could be a point of consideration for investors looking at the company's near-term financial flexibility.

Legal Expert

Altria's press release includes a disclaimer regarding forward-looking and cautionary statements, which is a standard legal practice to protect the company from potential litigation related to future performance. The disclaimer also serves as a reminder to investors that the share repurchase program is subject to changes based on market conditions and board discretion, which introduces an element of uncertainty. The adherence to securities laws and regulations, as mentioned in the context of the sale of ABI shares, underscores the company's commitment to compliance and the importance of regulatory considerations in such financial transactions.

The lockup period and the underwriters' option to purchase additional shares are contractual elements that investors should be aware of, as they can affect the stock's liquidity and available float. Understanding these legal nuances is essential for stakeholders to fully grasp the implications of Altria's recent financial activities.

RICHMOND, Va.--(BUSINESS WIRE)-- Altria Group, Inc. (Altria) (NYSE: MO) today announces that we entered accelerated share repurchase (ASR) transactions under separate agreements with Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC on March 15, 2024, to repurchase $2.4 billion of our common stock. Under the terms of the ASR agreements, on March 19, 2024, we received an initial share delivery of approximately 85% of the shares to be repurchased, based on the closing price per share of our common stock on March 15, 2024. We expect the remainder of the shares to be delivered no later than the end of the second quarter of 2024. Under certain circumstances specified in the ASR agreements, we may be required to deliver shares or pay cash, at our option, upon settlement of the ASR agreements. The total number of shares ultimately purchased under the ASR agreements will depend upon final settlement and will be based on volume-weighted average prices of our common stock during the terms of the ASR transactions, less a discount. The ASR transactions are part of our expanded $3.4 billion share repurchase program, which we expect to complete by December 31, 2024. Share repurchases depend on marketplace conditions and other factors, and the program remains subject to the discretion of our Board of Directors.

We also announce the closing of our sale of 35 million shares of Anheuser-Busch InBev SA/NV (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, at a price of $61.50 per ADS, corresponding to €56.17 per ABI ordinary share. In addition, ABI repurchased $200 million of ordinary shares directly from us, concurrently with the completion of the offering. We granted the underwriters an option to purchase up to an additional 5.25 million of our ABI shares at the price per ADS paid by the underwriters in the offering, exercisable within 30 days of the underwriting agreement, executed on March 14, 2024. In conjunction with the offering, we committed to a 180-day lockup from the date of the underwriting agreement with the lead underwriter for our remaining ABI shares.

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.

Forward-Looking and Cautionary Statements

This release contains certain forward-looking statements that are subject to various risks and uncertainties and are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, the total number of shares to be delivered at the final settlement of the ASR transactions, the expected timing of the final settlement of the ASR transactions and the expected timing of completion of our expanded share repurchase program. 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/20240319501333/en/

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Source: Altria Group, Inc.

FAQ

What is Altria Group, Inc. (MO) announcing regarding share repurchase transactions?

Altria Group, Inc. (MO) announced entering accelerated share repurchase transactions to repurchase $2.4 billion of their common stock.

What is the total value of the share repurchase program mentioned by Altria Group, Inc. (MO)?

Altria Group, Inc. (MO) mentioned a $3.4 billion share repurchase program.

What sale did Altria Group, Inc. (MO) close recently?

Altria Group, Inc. (MO) closed the sale of 35 million shares of Anheuser-Busch InBev SA/NV (BUD) through a global secondary offering.

At what price did Altria Group, Inc. (MO) sell the shares of Anheuser-Busch InBev SA/NV (BUD) in the recent offering?

Altria Group, Inc. (MO) sold the shares of Anheuser-Busch InBev SA/NV (BUD) at a price of $61.50 per ADS, corresponding to €56.17 per ABI ordinary share.