Altria to sell wine business for US$1.2B in renewed focus on tobacco

US – Altria Group, Inc., a leading producer of tobacco products, has announced that its subsidiary, UST LLC, has entered into a definitive agreement to sell its Ste. Michelle Wine Estates (Ste. Michelle) business to Sycamore Partners Management, L.P. 

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

Its new owner, Sycamore Partners Management, L.P., is a private equity firm specializing in consumer, retail, and distribution investments (Sycamore Partners). 

According to a statement from Altria, the all-cash transaction has a purchase price of approximately US$1.2 billion. Upon conclusion of the deal, Sycamore Partners is also expected to assume certain Ste. Michelle liabilities.  

 “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,” said Billy Gifford, Altria’s Chief Executive Officer.  

Altria’s Vision through 2030 is to responsibly lead the transition of adult smokers to a non-combustible future by taking action to transition millions to potentially less harmful choices. 

Altria’s non-combustible portfolio includes Helix Innovations LLC (Helix), the maker of on! oral nicotine pouches, exclusive U.S. commercialization rights to the IQOS Tobacco Heating System and Marlboro HeatSticks. 

Commenting on the offloading of Ste. Michelle, Gifford said: “Ste. Michelle and its talented employees have built an outstanding portfolio of premium wine brands, and we wish them future success.” 

Altria expects to use the net proceeds from the Transaction for additional share repurchases, subject to approval by its Board of Directors. 

“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 President and Chief Executive Officer. 

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. 

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