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Altria (MO) Hits 52-Week High on AB InBev-SABMiller Deal

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Shares of cigarette manufacturer Altria Group Inc.MO hit a new 52-week high of $59.12 on Oct 16 as Altria stands to benefit from the $104 billion merger of beer giants Anheuser-Busch InBev BUD and its rival SABMiller plc SBMRY .

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On Oct 13, London-based SABMiller finally agreed to a takeover bid from Belgium-based rival Anheuser Busch for $104.2 billion after rejecting several offers.While common shareholders will get $67.59 a share, SABMiller's two biggest investors - Altria and the Santo Domingo family from Columbia - will receive a cash and shares alternative worth about $60 per share.

The price offered represents a 33% premium to SABMiller's closing price as on Sep 14. The premium allows these two shareholders to receive a higher stake in the combined AB-Inbev-SABMiller transaction than they would have in the event of a merger-of-equals where no premium was granted.

Altria currently owns 27% share in SABMiller after it sold 9% of its stake to South African Breweries plc in 2010 for the Philip Morris International Inc. PM spin-off. SABMiller is a non-core business and some investors believe that a takeover bid from Anheuser-Busch would be Altria's best opportunity to cash out of the SABMiller stake at a maximum profit. Altria, which has always supported the merger, can then use the proceeds to reinvest in its core businesses or return value to shareholders.

Altria, which currently carries a Zacks Rank #2 (Buy), expects full-year 2015 earnings to benefit from reduced interest expense, lower effective tax rate and lesser share count due to the current share buyback program.

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ALTRIA GROUP (MO): Free Stock Analysis Report

ANHEUSER-BU ADR (BUD): Free Stock Analysis Report

SABMILLER PLC (SBMRY): Free Stock Analysis Report

PHILIP MORRIS (PM): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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