London, England – Anheuser-Busch InBev faced a significant drop in its shares on Thursday, closing nearly 5% lower after a trading suspension and new details emerged regarding tobacco giant Altria’s stake sale in the company.
Altria, a prominent U.S. cigarette producer, announced on Wednesday its intention to reduce its approximately 10% stake in the world’s leading beer manufacturer by selling about 35 million shares, equivalent to one-fifth of its total holding. In response, AB InBev revealed plans to repurchase $200 million worth of shares.
During the trading day, AB InBev’s shares were put on hold at the request of Belgium’s Financial Services and Markets Authority (FSMA) until a press release was issued with pricing specifics. The suspension was lifted later in the day.
The agreed price for Altria’s shares was set just below 55 euros per AB InBev share, representing a discount of approximately 6.5% compared to the previous day’s closing price of 58.82 euros per share. Following the sale, Altria’s ownership in the company will be reduced to around 8.1%, or 7.8% if its underwriters opt to purchase additional securities.
Experts believe that although the sale may temporarily impact AB InBev’s share price, in the long run, it holds minimal significance. James Edwardes Jones, an analyst at RBC Capital Markets, remarked that the move was not unexpected.
In a strategic move back in 2016, Altria gained a stake in AB InBev when the latter acquired SABMiller, an African beer producer. However, as AB InBev’s stock has gradually decreased in value over the years, Altria has shifted its perspective on the investment from strategic to solely financial.
Altria announced on Thursday its intention to expand its share buyback program by $2.4 billion in light of the recent stake sale. Overall, the transaction signals a shift in Altria’s investment strategy and reflects the changing dynamics within the beverage and tobacco industries.
As AB InBev navigates this period of transition, analysts will closely monitor the company’s performance and the implications of Altria’s divestment on its future trajectory.