Analysts are now speculating that tobacco major, Altria (NYSE: MO) could sell its stake in Anheuser-Busch InBev (BUD) after selling its stake in JUUL Labs and acquiring NJOY. Altria has had around a 9% stake in BUD since 2016 after Anheuser-Busch’s acquisition of SABMiller in which Altria had a majority stake.
New York tax expert Robert Willens told Barron’s that Altria needs to offset its huge capital loss in JUUL with a capital gain and not from Altria’s ordinary businesses. The carrying and the estimated value of Altria’s investment in JUUL as of December 31, 2022, was $250 million when its stake was originally valued at $12.8 billion.
As a result, Willens commented, “One obvious source of capital-gain income for Altria would be its ABI (Anheuser-Busch Inbev (BUD)) stake, in which Altria has a negligible tax basis. This might be the time for Altria to finally monetize its ABI stake which, in light of the large capital loss it now has at its disposal, can be done on what amounts to a tax-free basis.”
The same sentiment was also echoed by Citi analyst Simon Hales who stated that Altria’s divesting its JUUL stake “will once again lead to questions as to whether the group will now begin to sell-down Anheuser-Busch equity stake. We think the probability of a disposal is increasing…”
Sal Manusco, Altria’s CFO had addressed the ABI stake issue at its Q4 earnings call and had commented, “I really have nothing to report on the ABI asset. We continue to do the analysis that we do with all capital allocations. And currently, we believe the best thing for the shareholder over the long term is to hold the asset.”
In FY22, Altria recorded $571 million of adjusted equity earnings regarding its BUD stake, down 10.6% year-over-year.
Overall, analysts remain sidelined about MO stock with a Hold consensus rating based on two Buys, four Holds and one Sell.