Jul 14, 2021

Altria to sell its Ste. Michelle Wine Estates business

Altria Group Inc. announced July 9 that its subsidiary, UST LLC, has entered into a definitive agreement to sell its Ste. Michelle Wine Estates business, headquartered in Woodinville, Washington, to Sycamore Partners Management L.P., a private equity firm.

The all-cash transaction was made with a purchase price of approximately $1.2 billion and the assumption of certain Ste. Michelle liabilities. Altria’s net cash proceeds will be subject to customary net working capital and other adjustments at closing.

Altria expects the transaction to close during the second half of 2021, subject to Sycamore Partners obtaining the necessary financing and the satisfaction of customary closing conditions, including antitrust regulatory clearance.

“We believe the transaction is an important step in Altria’s value creation for shareholders and allows our management team greater focus on the pursuit of our Vision to responsibly transition adult smokers to a non-combustible future,” Billy Gifford, Altria’s chief executive officer, said in a news release. “Ste. Michelle and its talented employees have built an outstanding portfolio of premium wine brands, and we wish them future success.”

“The Ste. Michelle leadership team and I look forward to working with the team at Sycamore Partners and believe we are well-positioned to drive the next phase of our growth,” said David Dearie, Ste. Michelle’s (SMWE)  president and chief executive officer.

Transaction-related financialimplications

Altria expects to record any gain or loss on the Transaction and related disposition items, which it does not anticipate being material to Altria, in the second half of 2021. Altria intends to treat these amounts as special items and exclude them from its adjusted diluted earnings per share. Altria does not expect to account for the results of Ste. Michelle as discontinued operations.

Altria expects to use the net proceeds from the transaction for additional share repurchases, subject to approval by its board of directors.

Credit Suisse Securities (USA) LLC represented Altria as financial advisor, and White & Case LLP provided legal counsel to Altria for the Transaction.

Altria complements its tobacco portfolio with ownership of Ste. Michelle Wine Estates Ltd. (SMWE) and equity investments in Anheuser-Busch InBev SA/NV (ABI), the world’s largest brewer, and Cronos Group Inc. (Cronos), a leading Canadian cannabinoid company.

SMWE produces and markets premium wines sold under various labels, including Chateau Ste. Michelle, 14 Hands and Stag’s Leap Wine Cellars, and it imports and markets Antinori and Champagne Nicolas Feuillatte products in the United States.