8-KAcquisitions & DispositionsRegulation FDOther Events+1

ALTRIA GROUP, INC. 8-K Report, Acquisition Completed (Oct 11, 2016)

Filed October 11, 2016For Securities:MO

Summary

This 8-K filing from Altria Group, Inc. (MO) announces the completion of the Anheuser-Busch InBev SA/NV (AB InBev) acquisition of SABMiller plc, a transaction in which Altria was a significant shareholder. Altria has received approximately $5.3 billion in pre-tax cash and a 9.6% stake in the newly formed AB InBev, represented by 185,115,417 restricted shares. These restricted shares are subject to a five-year lock-up but carry equal dividend and voting rights to ordinary shares, along with director nomination rights. The company expects to record a substantial pre-tax gain of approximately $13.7 billion from this transaction, primarily in the fourth quarter of 2016. This event also leads to an expanded share repurchase program and a revision of Altria's 2016 full-year adjusted diluted EPS guidance to a 6.5% to 8.5% growth rate.

Key Highlights

  • 1Altria has received approximately $5.3 billion in cash and a 9.6% ownership stake in the combined AB InBev.
  • 2The company expects to recognize a significant pre-tax gain of approximately $13.7 billion from the transaction, mostly in Q4 2016.
  • 3Altria's stake in AB InBev is in the form of restricted shares with a five-year lock-up, convertible into ordinary shares thereafter.
  • 4Altria's CEO and CFO have been appointed to the AB InBev Board of Directors, reflecting its significant ownership.
  • 5Altria's share repurchase program has been expanded by $2 billion, bringing the total to $3 billion, expected to be completed by mid-2018.
  • 6The company revised its 2016 full-year adjusted diluted EPS growth guidance to 6.5%-8.5% due to a one-quarter reporting lag for AB InBev's results.
  • 7The investment in AB InBev will be accounted for using the equity method with a one-quarter lag.

Frequently Asked Questions

This filing reports the completion of the acquisition of SABMiller plc by Anheuser-Busch InBev SA/NV (AB InBev). Altria Group, Inc. was a significant shareholder in SABMiller and received cash and shares in the combined AB InBev as a result.

Altria received approximately $5.3 billion in pre-tax cash and 185,115,417 restricted shares of AB InBev, representing a 9.6% economic and voting interest. The company anticipates recording a substantial pre-tax gain of roughly $13.7 billion from this transaction, mainly in the fourth quarter of 2016.

The restricted shares are unlisted and subject to a five-year lock-up. After this period, they are convertible into ordinary AB InBev shares on a one-for-one basis. These shares rank equally with ordinary shares in terms of dividends and voting rights, and Altria holds director nomination rights.

Altria will account for its AB InBev investment using the equity method. Due to reporting lags, Altria will report its share of AB InBev's results with a one-quarter delay. For example, its share of AB InBev's Q4 2016 results will be recorded in Altria's Q1 2017 earnings.