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Shares in brewer AB InBev suspended after Altria stake sale plan
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Shares in brewer AB InBev suspended after Altria stake sale plan
Mar 14, 2024 3:36 AM

LONDON (Reuters) -Anheuser-Busch InBev's shares were suspended from trading on Thursday at the request of Belgium's Financial Services and Markets Authority (FSMA) following the news tobacco giant Altria ( MO ) would sell down its stake in the brewer.

The U.S. cigarette maker said on Wednesday it would cut its around 10% stake in the world's top beer maker, selling around 35 million shares or around a fifth of its total holding. AB InBev plans to buy back $200 million worth of shares.

AB InBev said in its accompanying statement on Wednesday that the FSMA had requested a suspension of trading on Thursday until the publication of a press release on pricing expected later on that day.

"We remain disciplined in our capital allocation decisions and participating in this offering is consistent with our strategy," AB InBev CEO Michel Doukeris added.

James Edwardes Jones, analyst at RBC Capital Markets, said it was unsurprising Altria ( MO ) was selling down its holding in AB InBev.

"On balance, we feel that this is likely to act as a short-term brake on ABI's share price but is of minimal longer-term significance," he said in a note.

Altria ( MO ) received cash and a stake in AB InBev in return for its holding in SABMiller when AB InBev acquired the African beer maker in 2016. The tobacco company also added to its stake in the combined brewer around that time.

In 2016, AB InBev consistently traded at over $120 per share and sometimes as high as $130 per share. It has been in steady decline since and traded for just over $64 per share on Wednesday.

Callum Elliott, analyst at Bernstein, said that as the income generated by its stake has declined, Altria ( MO ) has shifted from viewing it as "strategic" to a "financial investment".

The tobacco company wants to use the proceeds from the sale to fund additional buybacks of its own stock.

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