UK: SABMiller’s shares recover after Altria rejected speculation of its stake’s sale

The SABMiller share price yesterday recovered some of the losses it had suffered earlier in the week on the back of speculation that Altria, formerly Philip Morris, was planning to announce the sale of all or part of its 28 percent stake in the beer group, Business Report published February 2.

At the beginning of the week US and UK-based analysts speculated that when Altria, the owner of Phillip Morris tobacco and Kraft Foods, announced its results, it would reveal plans to sell off some of the 430 million SABMiller shares that it owns.

However, this week's results announcement made no reference to the SABMiller stake - although it did provide details of the proposed unbundling of Altria's 89 percent holding in Kraft.

The Kraft unbundling is seen as a defensive move ahead of tobacco-related litigation.

A spokesperson for SABMiller said yesterday that the group was not aware of any plans for a disposal by Altria but said that the future of the shareholding was a matter that should be raised with the Altria board.

Altria acquired the stake in SABMiller in July 2002 as part of the acquisition of Miller by SAB for $5 billion (R36 billion at current exchange rates).

The deal was funded through a mix of shares and cash. The day before the Miller acquisition was completed, the SAB share was trading at £5.12 (R73 at current rates) on the London Stock Exchange (LSE).

SABMiller is now trading just below £12, which puts a value of about £5.2 billion on Altria's stake.

The multibillion-dollar deal, which took analysts and investors by surprise, propelled SAB from being a leading emerging market beer group to being the number two global player. It has maintained that position in a rapidly consolidating industry through the recent acquisition of South America's largest beer group, Bavaria.

In terms of the 2002 Miller deal, Altria was prohibited from selling any of the 430 million shares until June 2005. Since that time, Altria has been allowed to dispose of shares but is restricted from dumping them on the market.

If it plans to sell large blocks of shares, it is required to come to an agreement with SABMiller about "an orderly market arrangement" to effect the sale.

After Altria, the second-largest shareholder in SABMiller is the South American-based family that sold its controlling stake in Bavaria to SABMiller.

Bloomberg reports that Morgan Stanley sold SABMiller shares worth about £55 million yesterday, according to a person familiar with the transaction.

The brokerage offered 4.7 million shares at £11.67 each, said the source, who did not say who commissioned the sale.

Shares of SABMiller rose 22p, or 1.9 percent, to close at £11.76 on the LSE yesterday.

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