8-KRegulation FDOther EventsExhibits & Filings

ALTRIA GROUP, INC. 8-K Report, Regulation FD Disclosure (Nov 12, 2015)

Filed November 12, 2015For Securities:MO

Summary

This 8-K filing from Altria Group, Inc. (MO) on November 12, 2015, primarily discloses Altria's pivotal role and strategic decision regarding Anheuser-Busch InBev's (AB InBev) $107 billion firm offer to acquire SABMiller plc. Altria, a significant shareholder in SABMiller, has provided an irrevocable undertaking to vote in favor of the transaction. Crucially, Altria has elected to receive a partial share alternative (PSA), which involves receiving restricted shares in a newly formed Belgian company (NewCo) that will own the combined SABMiller and AB InBev business, along with a cash component. This move is expected to defer U.S. corporate income tax for Altria, though the exact ownership stake and cash received are subject to proration if PSA elections exceed certain limits. The transaction is significant for Altria as it anticipates a substantial one-time pre-tax accounting gain of approximately $12 billion upon closing. Altria will hold an approximate 10.5% interest in NewCo, which will be unlisted and subject to a five-year lock-up. The filing also outlines agreements related to tax matters and information rights to facilitate Altria's reporting and financial planning post-transaction. Investors should note the forward-looking statements and risks associated with the transaction, including potential proration, currency fluctuations, and regulatory approvals.

Key Highlights

  • 1Altria irrevocably committed to voting its SABMiller shares in favor of the AB InBev acquisition.
  • 2Altria elected the Partial Share Alternative (PSA) for its SABMiller stake, opting for restricted shares in NewCo and cash, rather than the all-cash offer.
  • 3The transaction is expected to result in a significant one-time pre-tax accounting gain of approximately $12 billion for Altria.
  • 4Altria anticipates receiving restricted shares representing an approximate 10.5% interest in the combined entity (NewCo), subject to proration.
  • 5The restricted shares in NewCo will be unlisted and subject to a five-year lock-up period.
  • 6Altria expects the transaction structure to defer U.S. corporate income tax, with a Tax Matters Agreement in place.
  • 7The filing includes discussion of risks, such as proration of the PSA, currency fluctuations (GBP/USD), and regulatory approvals impacting the deal.

Frequently Asked Questions

Altria is filing this 8-K to disclose its decision and commitment regarding the proposed business combination between Anheuser-Busch InBev (AB InBev) and SABMiller plc. Specifically, it details Altria's vote of its SABMiller shares in favor of the deal and its election to participate in the Partial Share Alternative (PSA).

Altria anticipates a significant one-time pre-tax accounting gain of approximately $12 billion upon closing. Furthermore, the structure of the transaction is expected to allow Altria to defer U.S. corporate income tax on the portion of the deal it receives.

Altria expects to receive restricted shares representing an approximate 10.5% economic and voting interest in NewCo. However, this percentage is subject to proration if the total PSA elections exceed the maximum shares allowed. These restricted shares will be unlisted, subject to a five-year lock-up, and will rank equally with ordinary shares in dividends and voting rights after the lock-up.

Key risks include the possibility of proration, which could reduce Altria's ownership in NewCo and increase its cash received or tax liabilities. Currency fluctuations, particularly the British pound against the U.S. dollar, could impact the value of the cash consideration. The transaction is also subject to shareholder and regulatory approvals, and the tax treatment of the transaction is not guaranteed.