RICHMOND, Va. - Altria Group , Inc. (NYSE: NYSE:MO), a leading producer of tobacco and related products, has entered into transactions to sell a portion of its stake in Anheuser-Busch InBev SA/NV (ABI) (NYSE: BUD), and concurrently increase its share repurchase program.
The company plans to sell 35 million shares of ABI for approximately $2.4 billion through a global secondary offering and a direct repurchase by ABI.
The sale price is set at $61.50 per American depositary share, equivalent to €56.17 per ordinary share. Additionally, ABI will repurchase $200 million worth of its ordinary shares from Altria, contingent upon the completion of the global offering. Altria has also provided an option for underwriters to purchase up to 5.25 million additional ABI shares within the next 30 days.
In line with the sale, Altria has announced an increase in its share repurchase program from $1 billion to $2.4 billion, expected to be completed by December 31, 2024.
The company is considering an accelerated share repurchase program with the same financial magnitude. Altria's CEO, Billy Gifford, expressed confidence in the company's future and its commitment to creating shareholder value.
Post-transaction, Altria's ownership in ABI will reduce to about 8.1% or 7.8% if the underwriters' option is fully exercised, leaving the company with approximately 159 million ABI shares.
Altria has agreed to a 180-day lockup period for its remaining shares with the lead underwriter and intends to maintain two seats on ABI's board of directors until the 2025 annual general meeting, after which it will be reduced to one seat.
Altria expects the transactions to positively impact its 2024 full-year adjusted diluted earnings per share (EPS), raising its guidance to a range of $5.05 to $5.17, which represents a growth rate of 2% to 4.5% from $4.95 in 2023. The guidance includes the anticipated effect of the reduced share count and lower equity earnings from the smaller ABI investment stake.
The company's financial strategy includes using the cash savings from the sale to support general corporate activities, such as investments in its vision, debt repayment, or further cash returns to shareholders. Altria remains committed to a target of mid-single digits dividend per share growth annually through 2028.
This article is based on a press release statement from Altria Group, Inc.
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