USA/Belgium: AB InBev's major shareholder sells shares for USD 2.4 billion

U.S. tobacco giant Altria, known for Marlboro cigarettes, has raised USD 2.4 billion today by selling 35 million of its 197 million shares in AB InBev, constituting about one-fifth of its total holding. The sale, comprising a mix of ordinary shares and American depositary shares (ADS), was priced at EUR 56.17 per ordinary share, approximately 6.5% lower than Wednesday's closing price, and USD 61.50 for ADS. Altria has also granted underwriters the option to sell an additional 5.25 million shares in an overallotment offering.

In a separate deal, AB InBev agreed to repurchase 3.3 million ordinary shares from Altria for USD 200 million. These transactions reduce Altria’s stake in AB InBev from about 10% to 8.1%, or 7.8% if the overallotment is fully exercised.

Altria's Chief Executive Officer Billy Gifford stated, “Over the decades of our ownership, the beer investment has provided significant income and cash returns and supported our strong balance sheet.” He characterized the sale of a fifth of its stake in AB InBev as an “opportunistic transaction” aimed at generating substantial returns on investment. Gifford expressed ongoing confidence in ABI’s long-term strategies, premium global brands, and experienced management team.

“We expect to use the proceeds for additional share repurchases of our common stock,” Altria mentioned in a press statement. The company announced a USD 2.4 billion increase to its existing USD 1 billion buyback program, intending to complete it by the end of 2024. This move is expected to save money by reducing dividend payments after the shares are repurchased.

Experts foresee potential for further buybacks in the second half and beyond, considering balance sheet repair and AB InBev’s increasing cash flows.

Altria's action follows closely on the heels of rival British American Tobacco's announcement to sell up to USD 2.1 billion worth of shares in its Indian partner ITC. The proceeds will be used to return cash to shareholders and invest in its business, especially in research and development of alternative nicotine products.

AB InBev's shares were temporarily suspended on Thursday at the request of Belgium's Financial Services and Markets Authority (FSMA) until after the publication of a press release detailing pricing information. The shares later slipped to a closing price 4.85% lower, marking their largest decline in nearly two years. In contrast, Altria shares rose nearly 1%, reaching their highest level since September.

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