Altria Announces A $2.4B Increase To Our Existing $1B Share Repurchase Program In Connection With Pricing Of Offering Of Anheuser-Busch InBev Stock; Raises FY24 EPS Guidance To $5.05-$5.17 Vs $5.05 Est.

Author: Benzinga Newsdesk | March 14, 2024 10:00am

Altria Group, Inc. (Altria) (NYSE:MO) today announced that it has agreed to sell 35 million shares of Anheuser-Busch InBev SA/NV (ABI) (NYSE:BUD) (Euronext: ABI) (MEXBOL: ANB) (JSE: ANH) through a global secondary offering (offering) comprised of a public offering of ABI ordinary shares represented by American depositary shares (ADS) in the United States, a public offering of ABI ordinary shares in the United States, a concurrent private placement of ABI ordinary shares in the European Economic Area and the United Kingdom and an offering of ABI ordinary shares, including ABI ordinary shares represented by ADSs, in other countries outside the United States, at a price of $61.50 per ADS, corresponding to €56.17 per ABI ordinary share. In addition, ABI will repurchase $200 million of ordinary shares directly from Altria, concurrently with, and conditional on, completion of the offering. The aggregate amount of the offering and repurchase by ABI is approximately $2.4 billion. Altria has also granted the underwriters an option to purchase up to 5.25 million additional ABI shares owned by Altria at the price per ADS paid by the underwriters in the offering, exercisable within the next 30 days.

In connection with the pricing of the offering, we announce a $2.4 billion increase to our existing $1 billion share repurchase program. Our Board of Directors (Board) has authorized the expanded program, which we expect to complete by December 31, 2024. Share repurchases depend on marketplace conditions and other factors, and the program remains subject to the discretion of our Board. As part of the expanded share repurchase program, we expect to enter into an estimated $2.4 billion accelerated share repurchase (ASR) program. We expect cash savings from the elimination of future dividend payments on the repurchased shares.

"These opportunistic capital allocation decisions reflect our ongoing confidence in Altria's future and the significant value offered in our shares today," said Billy Gifford, Altria's Chief Executive Officer. "We have a longstanding history of returning cash to our shareholders, and today's announcement reflects our continued desire to create long-term shareholder value."

This press release shall not constitute an offer to sell or the solicitation of an offer to buy the securities described herein, nor shall there be any offer or sale of these securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

Partial Sale of Our Investment in ABI

• Our remaining ownership of ABI after the offering and the share repurchase by ABI will be approximately 8.1% (or approximately 7.8% assuming full exercise of the underwriters' option to purchase additional shares). We estimate that we will own approximately 159 million shares of ABI (or approximately 154 million shares of ABI assuming full exercise of the underwriters' option to purchase additional shares) following the offering and the share repurchase by ABI.
• In conjunction with the offering, we have agreed to a 180-day lockup with the lead underwriter for our remaining ABI shares.
• We expect to maintain two seats on ABI's board of directors through ABI's 2025 annual general meeting. Following such meeting, we expect to have one seat on ABI's board of directors, in accordance with our rights as a holder of restricted shares.
• Following the offering, we expect to continue to use the equity method of accounting for our investment in ABI.

Financial Flexibility and Cash Returns to Shareholders

• We expect cash savings from the elimination of future dividend payments on the repurchased shares of our common stock. These cash savings may be used for general corporate purposes including investments in our Vision, debt repayment or further cash returns to shareholders.
• We remain committed to our progressive dividend goal that targets mid-single digits dividend per share growth annually through 2028. Future dividend payments remain subject to the discretion of our Board.

2024 Full-Year Guidance

We expect the combined transactions will be accretive to our 2024 full-year adjusted diluted earnings per share (EPS). Therefore, we raise our guidance for 2024 full-year adjusted diluted EPS to be in a range of $5.05 to $5.17, representing a growth rate of 2% to 4.5% from a base of $4.95 in 2023, to reflect our estimate for lower 2024 weighted-average shares outstanding, partially offset by lower equity earnings related to the reduced ownership of our investment in ABI. We expect 2024 adjusted diluted EPS growth to be weighted to the second half of the year. Our guidance includes the impact of two additional shipping days in 2024 and assumes limited impact from enforcement efforts in the illicit e-vapor market on combustible and e-vapor volumes.

While the 2024 full-year adjusted diluted EPS guidance accounts for a range of scenarios, the external environment remains dynamic. We will continue to monitor conditions related to (i) the economy, including the cumulative impact of inflation, (ii) adult tobacco consumer dynamics, including purchasing patterns and adoption of smoke-free products, (iii) illicit e-vapor enforcement and (iv) regulatory, litigation and legislative developments.

Our 2024 full-year adjusted diluted EPS guidance range includes planned investments in support of our Vision, such as (i) marketplace activities in support of our smoke-free products and (ii) continued smoke-free product research, development and regulatory preparation expenses.

The 2024 full-year adjusted diluted EPS guidance range excludes estimated net income of approximately $0.2 billion (or $0.12 per share) that we expect to record in the first quarter of 2024 for the partial sale of our investment in ABI. This estimated net income is subject to certain adjustments, including any exercise of the underwriters' option to purchase additional shares, adjustments related to the conversion from international financial reporting standards to U.S. generally accepted accounting principles (GAAP) and adjustments required under the equity method of accounting. Additionally, the guidance excludes an estimated per share gain of $1.17 related to the sale of the IQOS Tobacco Heating System commercialization rights that we expect to record in the second quarter of 2024.

Our full-year adjusted diluted EPS guidance range excludes the impact of certain income and expense items that our management believes are not part of underlying operations. These items may include, for example, loss on early extinguishment of debt, restructuring charges, asset impairment charges, acquisition, disposition and integration-related items, equity investment-related special items, certain income tax items, charges associated with tobacco and health and certain other litigation items, and resolutions of certain non-participating manufacturer (NPM) adjustment disputes under the MSA (NPM Adjustment Items).

Our management cannot estimate on a forward-looking basis the impact of certain income and expense items, including those items noted in the preceding paragraph, on our reported diluted EPS because these items, which could be significant, may be unusual or infrequent, are difficult to predict and may be highly variable. As a result, we do not provide a corresponding GAAP measure for, or reconciliation to, our adjusted diluted EPS guidance.

Posted In: BUD MO