Altria (MO -0.37%) is pouring out some of its Anheuser-Busch InBev (BUD 0.12%) stock. The move is leaving BUD holders with a bad taste in their mouth, sending shares of the spirits maker down 5% as of 11:30 a.m. ET.
Trading drinks for tobacco
Altria, the global tobacco giant, has been a major shareholder of beer and spirits maker Anheuser-Busch InBev for nearly a decade, having acquired cash and shares as part of AB InBev's 2016 acquisition of SABMiller.
Late Wednesday, Altria announced plans to raise more than $2 billion by selling 34 million AB InBev shares, plus an underwriter allotment. The proceeds will be used to help fund a $2.4 billion increase to Altria's share buyback program.
The sale would reduce Altria's holdings in AB InBev to about 8.1%, or 7.8% if the underwriters fully exercise their options.
"As good stewards of shareholder capital, we consistently review options to unlock the value of our ABI investment, and we believe this is an opportunistic transaction that realizes a portion of the substantial return on our long-term investment," Altria CEO Billy Gifford said in a statement.
Is AB InBev stock a buy even as Altria is selling?
It has been a tough few years for AB InBev, with the company forced to navigate both through changing consumer tastes and culture wars in the United States. The stock is down nearly 40% since 2019, and there is no easy path to a recovery from here.
Altria is effectively selling AB InBev stock to buy its own, which could be interpreted as a sign that Altria management believes AB InBev shares are fairly valued right now and will not be bouncing back to previous highs any time soon. Investors would be wise to consider Altria's analysis before buying in themselves.
