| Tue 22 Feb 2005, 14:44 | | Altria regains voting share in SABMiller |
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Altria regains voting share in SABMiller
Charlotte Mathews
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Consumer Industries Editor
CAPE TOWN — Global brewer SABMiller has converted 27,6-million of the low-voting shares held by US-based food and tobacco giant Altria to ordinary shares to restore Altria’s voting interest to 24,99%, the company said yesterday.
Altria acquired an effective 36% economic interest in SABMiller and a 24,99% voting interest when it sold its subsidiary Miller Brewing to SA Breweries in July 2002.
According to SABMiller’s latest annual report, Altria agreed to a lock-up period, which means it cannot sell its SABMiller shares — except in specific circumstances — before June this year.
In December SABMiller exercised its right to convert $600m of 4,25% convertible bonds into ordinary SABMiller shares, thus diluting Altria’s voting interest to 23,28%.
In terms of the agreement between the companies, Altria had the right to request the conversion of its low-voting shares to voting shares in the event of such a dilution.
An analyst, who asked not to be named, said the move was merely the exercise of a right and gave no clue as to Altria’s intentions for its SABMiller stake, which has been the subject of some speculation.
If Altria should decide to sell out of SABMiller after June, it would obviously try to realise the best price for its stake, so it is unlikely to dump its shares all at once.
Shareholders might expect these shares will come onto the market sooner or later, creating an over-supply, which could depress SABMiller’s share price in the short term. But it was difficult to determine if and to what extent this was the case, particularly as the group was trading well, the analyst said.
Altria owns tobacco company Philip Morris, the co-defendant in a number of actions in the US against tobacco companies, and 85% of food group Kraft Foods. Last November Altria chairman and CEO Louis Camillieri said the group was considering separating into distinct entities, but said a prerequisite for unbundling was a change in the tobacco litigation environment.
Two weeks ago a federal appeals court rejected a $280bn claim by the US government against the tobacco companies as part of an ongoing racketeering case. The Financial Times this month speculated that the ruling would hasten Altria’s breakup as it removed some of the risk that the US government would win the racketeering case.
It has been speculated that if the Altria group were to split up, it could unbundle its stake in SABMiller to its shareholders, removing some of the protection from takeover that SABMiller enjoys from having a single large shareholder.
SABMiller shares gained 44c to R94,66 on the JSE Securities Exchange SA yesterday. The shares have gained 39,2% from R68 a year ago, spurred by the group’s reporting steady earnings growth since the acquisition of Miller Brewing.
