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Altria Increases Buyback After $5.3 Billion Megabrew Payday

Published on Oct 11 2016 5:30 PM in A-Brands tagged: Tobacco / Coca-Cola / AB Inbev / MegaBrew / SAB Miller / Altria

Altria Increases Buyback After $5.3 Billion Megabrew Payday

Altria Group Inc. is expanding its stock-buyback plan after the cigarette maker received $5.3 billion in pretax cash from this week’s completion of a massive beer-industry merger.

The tobacco company will increase its repurchase program to $3 billion from $1 billion, according to a statement on Tuesday. Altria, which had been the top shareholder in SABMiller Plc, got the windfall after Anheuser-Busch InBev acquired the fellow brewer in a roughly $103 billion deal.

The beer merger -- known as Megabrew -- united the world’s two largest brewers and created a company that will sell one of every three beers sold worldwide. Altria, which markets Marlboro and other brands in the U.S., will own a 9.6 percent stake in the new entity. Altria’s stake in SABMiller dated back to when Altria was known as Philip Morris and acquired Miller as part of an effort to build a beverage and food conglomerate.

The stock buybacks will be completed by the end of the second quarter of 2018, Altria said on Tuesday. The company also revised its forecast for 2016, saying it expected earnings of $2.98 to $3.04 a share, excluding some items. That’s down from the $3.01 to $3.07 a share forecast previously, which Altria blamed on a reporting lag. The guidance excludes the accounting gain from the beer transaction, a loss from retiring debt and other items.

Coca-Cola Deal

The Megabrew transaction has implications for other North American companies, including Coca-Cola Co. and Molson Coors Brewing Co.

Coca-Cola will buy out AB InBev’s stake in Coca-Cola Beverages Africa, according to a separate statement Monday. The soda giant plans refranchise the bottler, meaning it will offload the business to independent owners.

Molson Coors, meanwhile, will take over the balance of its previous joint venture with SABMiller in the U.S., MillerCoors. The brewer also will sell Miller overseas. The shake-up was part of an attempt to make the beer transaction palatable to antitrust regulators.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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