Ab InBev-SABMiller Deal Advances; Altria Stands To Benefit?
Zacks Investment Research | Sep 29, 2016 10:10PM ET
Tobacco company Altria Group Inc. (NYSE:MO) holds a 27% stake in SABMiller (LON:SAB) Plc (OTC:SBMRY) , the world’s second-largest brewer by volume. This gives the company diversity and an edge over its peers. Additionally, the considerable amount of ownership in the beer company gave Altria a driving role in the megadeal between world’s leading distiller Anheuser-Busch InBev (NYSE:BUD) and SABMiller. Shares of Altria gained after majority of shareholders of SABmiller voted for the $103 billion deal.
AB InBev and SABMiller had reached an agreement to create the “first truly global beer company,” back in Oct 2015. The deal is expected to close in Oct 2016. Per the terms of the deal, Anheuser Busch will offer SABMiller’s biggest investor — Altria a combination of cash and Anheuser-Busch's own stock. This implies that Altria will receive a higher stake in the combined AB-Inbev-SABMiller transaction than it would have in the event of a merger of equals where no premium is granted.
While common shareholders of SABMiller will get $67.59 a share, SABMiller’s biggest investor, Altria will receive cash of about $60 per share (GBP 43.50 per share) with partial shares alternative, according to the deal. The cash represents a 48% premium to SABMiller’s closing price as on Sep 14 (the last business day prior to renewed speculation of an approach from AB InBev).
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