Trading of Bud Light Owner’s Shares Suspended Following Stakeholder’s 35 Million Share Sale Announcement
The trading of Anheuser-Busch InBev’s (AB InBev) shares was temporarily suspended on the Euronext Brussels stock exchange following the announcement of a major stakeholder’s decision to sell millions of company shares. Marlboro-maker Altria, a significant shareholder in AB InBev, disclosed its plans to sell around 35 million shares, causing AB InBev’s shares to plummet from $127 to $61. The Financial Services and Markets Authority (FSMA), Belgium’s financial regulator, implemented the suspension from 9:00 a.m. CET to 14:00 CET on Thursday to allow AB InBev and Altria to discuss the sale terms.
Following the discussions, AB InBev agreed to repurchase $200 million of ordinary shares directly from Altria. This agreement led to the resumption of trading, with AB InBev shares opening at approximately $61.50. The company’s shares experienced a decline of 3.75 percent from the previous day. The sale of shares will result in Altria holding an 8.1 percent stake in AB InBev, with a potential further drop to 7.8 percent if underwriters exercise their option to buy additional shares.
Altria’s decision to sell its shares in AB InBev comes amid disappointing sales for the beer manufacturer, particularly in the United States. While AB InBev reported a 7.8 percent gain in overall revenue for fiscal year 2023, revenues in the United States decreased by 9.5 percent, with a significant 17.3 percent dip in the fourth quarter. The decline in revenue was primarily attributed to a decrease in Bud Light sales.
Bud Light, once the top-selling beer brand in the United States, faced backlash and boycott calls after partnering with transgender social media personality Dylan Mulvaney in a promotional campaign. The campaign received criticism for allegedly pushing the transgender agenda. As a result, Bud Light’s sales plummeted, and it lost its position as the top-selling brand during the Super Bowl.
Former Anheuser-Busch executive Anson Frerick criticized the company’s handling of the Bud Light controversy, stating that they have not successfully regained the trust of their customers. Despite increased marketing efforts, sales have continued to decline. Frerick believes that until AB InBev restores trust with its customers, the brand will struggle to recover and experience growth.
AB InBev’s CEO, Michel Doukeris, expressed the company’s commitment to disciplined capital-allocation decisions and its participation in the share buyback. He emphasized the important shareholder relationship with Altria and the confidence in AB InBev’s long-term strategies, premium global brands, and experienced management team.
While the temporary suspension of trading and the sale of AB InBev shares may have initially caused a decline in the company’s stock price, analysts do not anticipate significant long-term consequences. They view Altria’s decision as a short-term brake on AB InBev’s share price, with minimal longer-term significance.
Overall, AB InBev faces challenges in reestablishing trust with customers and boosting sales, particularly for Bud Light. The company’s partnership controversy and subsequent boycott have taken a toll on the brand’s performance. However, with strategic investments and a focus on long-term strategies, AB InBev remains optimistic about its future prospects.
