AB InBev's shares slip on stake sale by tobacco giant

Analysts have for years speculated Altria might sell the stake in AB InBev, which dates back to when Anheuser-Busch acquired SABMiller in 2016.

Anheuser-Busch InBev's shares fell over 4% after a trading suspension was lifted on Thursday afternoon following more details on tobacco giant Altria's stake sale in the brewer.

US cigarette maker Altria said on Wednesday it would cut its about 10% stake in the world's top beer maker, selling about 35 million shares, or about a fifth of its total holding. AB InBev plans to buy back $200m (€183.5m) worth of shares.

AB InBev's shares were suspended on Thursday at the request of Belgium's Financial Services and Markets Authority (FSMA) until after the publication of a press release giving details on pricing. The suspension was lifted at 1pm.

The brewer said in its statement that Altria's underwriters would pay just under €55 per AB InBev share, a discount of about 6.5% to Wednesday's closing price of €58.82 per share.

The sale will see Altria's holding in the company reduced to about 8.1% or 7.8% if its underwriters fully exercise an option to purchase additional securities.

While the sale would likely be a short-term weight on AB InBev's share price, it was of "minimal longer-term significance" and was not surprising, James Edwardes Jones, analyst at RBC Capital Markets, said.

Altria 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, also adding to its stake 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 as the income generated by its stake has declined, Altria 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.

Analysts have for years speculated Altria might sell the stake in AB InBev, which dates back to when Anheuser-Busch acquired SABMiller in 2016.

“Over the decades of our ownership, the beer investment has provided significant income and cash returns and supported our strong balance sheet,” said Altria chief executive Billy Gifford. He said the sale of about a fifth of its stake in AB InBev was an “opportunistic transaction” to generate a substantial return on its investment.

• Reuters and Bloomberg