Brewer AB InBev's shares slip on Altria's stake sale
Reuters
Published Mar 14, 2024 08:31
Updated Mar 14, 2024 17:21
LONDON (Reuters) -Anheuser-Busch InBev's shares closed 4.85% lower on Thursday, following a brief trading suspension and more details on tobacco giant Altria (NYSE:MO)'s stake sale in the brewer.
U.S. cigarette maker Altria said on Wednesday it would cut its around 10% stake in the world's top beer maker, selling around 35 million shares or around a fifth of its total holding. AB InBev plans to buy back $200 million worth of shares.
AB InBev's shares were suspended on Thursday at the request of Belgium's Financial Services and Markets Authority (FSMA) until after the publication of a press release giving details on pricing. The suspension was lifted at 1300 GMT.
The brewer said in its statement that Altria's underwriters would pay just under 55 euros, or $60, per AB InBev share, a discount of around 6.5% discount to Wednesday's closing price of 58.82 euros per share.
The sale will see Altria's holding in the company reduced to around 8.1%, or 7.8% if its underwriters fully exercise an option to purchase additional securities.
While the sale would likely be a short-term weight on AB InBev's share price, it was of "minimal longer-term significance" and was not surprising, James Edwardes Jones, analyst at RBC Capital Markets, said.
Altria received cash and a stake in AB InBev in return for its holding in SABMiller (LON:SAB) when AB InBev acquired the African beer maker in 2016, also adding to its stake around that time.
In 2016, AB InBev consistently traded at over $120 per share and sometimes as high as $130 per share. It has been in steady decline since and traded for just over $64 per share on Wednesday.
Callum Elliott, analyst at Bernstein, said that as the income generated by its stake has declined, Altria has shifted from viewing it as "strategic" to a "financial investment".
The tobacco company said on Thursday it would expand its share buyback programme by $2.4 billion thanks to the sale.
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Written By: Reuters
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