(Bloomberg) — Altria Group Inc. is seeking to sell a portion of its stake in Anheuser-Busch InBev SA for as much as $2.2 billion to help fund its own share repurchases.
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Altria, which sells Marlboro cigarettes in the US, owns about 10% the beermaker. It will sell AB InBev stock in a secondary offering of American depositary shares, a public offering in the US, and a concurrent private placement in Europe and the UK, Altria said Wednesday in a statement.
Altria will offer the AB InBev US shares in a range of $60.75 to $62.75 each, according to people familiar with the plans who asked not to be identified because the details haven’t been made public. The shares closed at $64.55 on Wednesday.
AB InBev fell as much as 5.1% in extended New York trading. Altria was little changed.
AB InBev has also agreed to repurchase $200 million of shares directly from Altria when the offering is completed. Altria said it currently holds about 197 million AB InBev shares.
Analysts had for years speculated that Altria might sell the stake in AB InBev, which dates back to when Anheuser-Busch acquired SABMiller in 2016.
The fact that it’s selling some of the stake now, as competition heats up in cigarette alternatives, suggests Altria may also use some of the proceeds to develop its own products, said Bloomberg Intelligence analyst Kenneth Shea said.
“That’s an awful lot of money for share buybacks,” Shea said. “Reading between the lines, they need that cash to help them accelerate their diversification efforts into non-combustible products.”
These products include its NJOY vape products and On! oral nicotine pouches.
–With assistance from Tiffany Kary.
(Adds analyst comments in seventh and eighth paragraphs.)
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