Marlboro Maker Altria to Sell Wine Business for $1.2 Billion

Altria Group Inc. agreed to sell its Ste. Michelle Wine Estates business to Sycamore Partners Management LP as the maker of Marlboro cigarettes in the U.S. prunes its non-tobacco holdings.

The private equity firm will pay $1.2 billion in the cash deal, along with the assumption of certain Ste. Michelle liabilities, according to a statement Friday. The transaction is expected to close in the second half after receiving antitrust approval.

The deal comes as Altria tries to navigate changing smoking habits, with an increasing number of people shunning cigarettes across the developed world. Billy Gifford, the company’s chief executive officer, said in the statement that the sale will help Altria put “greater focus on the pursuit of our vision to responsibly transition adult smokers to a non-combustible future.”

Altria’s shares rose 2.7% at 9:39 a.m. in New York.

What Bloomberg Intelligence says:

“We see this as positive as Altria’s getting a generous price for a non-strategic business. Though net proceeds are earmarked for share repurchases, we still think management’s moving too slowly to diversify into adjacent businesses like cannabis via indirect investments.”

-- Kenneth Shea, BI consumer products analyst

Click here to read the research.

Altria, which owns a stake in Juul Labs Inc. and has been developing more smokeless tobacco products, is unloading more than its wine business. Altria’s Philip Morris USA unit sold its 18,000-acre Marlboro Ranch in Montana to a private equity firm, the Wall Street Journal reported Thursday.Ste. Michelle specializes in wines from the U.S. West Coast, with labels such as Columbia Crest, Stag’s Leap and Chateau Ste. Michelle. The business has been part of Altria since 2008.

Philip Morris International Inc., a separate company formed through an Altria spinoff that sells Marlboros outside the U.S., agreed to buy U.K. asthma drug maker Vectura Group Plc for $1.2 billion.

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