Altria buys UST

Source from:  tr.itsmyiq.com Sep 8, 2008 09/09/2008

Altria Group and UST have entered into a definitive agreement for Altria to acquire all outstanding shares of UST, the world's leading moist smokeless tobacco (MST) manufacturer. The transaction is valued at approximately $11.7 billion, which includes the assumption of approximately $1.3 billion of debt. "The combination of Altria and UST creates the premier tobacco company in the United States with leading brands in cigarettes, smokeless tobacco and machine-made large cigars," said Michael E. Szymanczyk, chairman and chief executive officer of Altria. "We are excited about this strategic and financially attractive acquisition as it will enhance our ability to deliver superior shareholder return that is expected to exceed our 12 percent goal. This transaction is consistent with our growth strategy of making disciplined investments in adjacent categories. UST provides Altria with the leading premium brands, Copenhagen and Skoal, in the highly profitable MST category. We will also acquire Ste. Michelle Wine Estates, a premium wine business, as part of the transaction." The transaction is subject to UST shareholder approval and customary regulatory approvals, which will be pursued promptly. Altria expects the acquisition of UST to be accretive to adjusted diluted earnings per share within twelve months of closing and to generate an attractive double-digit economic return. The integration is anticipated to generate approximately $250 million in annual synergies by 2011, primarily driven by reduced selling, general and administrative and corporate expenses. Altria believes that these estimated synergies will enable the company to deliver increased shareholder and consumer value. The UST acquisition is expected to grow and diversify Altria's operating income and net revenues. For the first half of 2008, reported operating income for Altria and UST was $2.6 billion and $451 million, respectively. If Altria had owned UST since the beginning of 2008, Altria's first half of 2008 net revenues would have increased 10.3 percent to $10.4 billion. Enditem