Stock Update (NYSE:MO): Altria Group Inc Announces Cash Tender Offer for Any and All of Its 9.95% Notes Due 2038 and Any and All of Its 10.20% Notes Due 2039

Altria Group Inc (NYSE:MO) announced that it is commencing a cash tender offer for any and all of its senior unsecured 9.95% Notes due 2038 (the “2038 Notes”) and any and all of its senior unsecured 10.20% Notes due 2039 (the “2039 Notes” and, together with the 2038 Notes, the “Notes”). Concurrently, Altria is commencing an underwritten public offering of new senior unsecured notes (the “New Notes”). Altria expects these transactions to reduce its weighted average coupon rate and ongoing interest expense and extend the weighted average maturity of its debt. The tender offer will expire at 5:00 p.m., New York City time, on Monday, September 19, 2016, unless extended or earlier terminated by Altria (the “Expiration Time”).

The terms and conditions of the tender offer are described in the Offer to Purchase, dated September 13, 2016 and the related Letter of Transmittal and Notice of Guaranteed Delivery. The following table sets forth certain information relating to pricing for the tender offer.

Title of Securities CUSIP Number Outstanding
Principal Amount
U.S. Treasury
Reference Security
Spread (bps)
Reference Page
9.95% Notesdue 2038 02209SAE3 $682,321,000 2.500% due
167 FIT1
10.20% Notesdue 2039 02209SAH6 $717,708,000 2.500% due
167 FIT1

Upon the terms and subject to the conditions of the tender offer, all Notes validly tendered and not validly withdrawn at or prior to the Expiration Time will be accepted for purchase. Altria reserves the right to terminate or withdraw the tender offer for the Notes, subject to applicable law. In the event of a termination or withdrawal of the tender offer, Notes tendered and not accepted for purchase pursuant to the tender offer will be promptly returned to the tendering holders.

Holders who wish to be eligible to receive the Total Consideration (as defined below) must validly tender and not validly withdraw their Notes at any time at or prior to the Expiration Time. Tendered Notes may be withdrawn at any time at or prior to the earlier of (i) the Expiration Time, and (ii) if the tender offer is extended, the 10th business day after commencement of the tender offer. Notes subject to the tender offer may also be validly withdrawn in the event the tender offer has not been consummated within 60 business days after commencement.

The applicable total consideration per $1,000 principal amount of each series of Notes (for each series of Notes, the “Total Consideration”) will be a price (calculated in accordance with standard market practice) determined as described in the Offer to Purchase by reference to a yield to maturity equal to the sum of (i) the yield to maturity for the United States Treasury (“UST”) Reference Security specified in the table above, calculated based on the bid-side price of such UST Reference Security as of 11:00 a.m., New York City time, on Monday, September 19, 2016, plus (ii) the applicable fixed spread specified in the table above.

In addition, holders whose Notes are purchased in the tender offer will be paid accrued and unpaid interest on their purchased Notes from the last applicable interest payment date up to, but not including, the payment date for such purchased Notes. Upon the terms and subject to the conditions of the tender offer, the settlement of the tender offer will occur promptly after the Expiration Time.

The tender offer is subject to the satisfaction or waiver of certain conditions, as specified in the Offer to Purchase.(Original Source)

Shares of Altria closed yesterday at $64.67, up $1.11 or 1.75%. MO has a 1-year high of $70.15 and a 1-year low of $52.27. The stock’s 50-day moving average is $65.90 and its 200-day moving average is $63.94.

On the ratings front, Altria has been the subject of a number of recent research reports. In a report issued on August 1, Argus analyst David Coleman maintained a Buy rating on MO, with a price target of $73, which represents a potential upside of 12.9% from where the stock is currently trading. Separately, on July 28, UBS’s Stephen Powers reiterated a Hold rating on the stock and has a price target of $69.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, David Coleman and Stephen Powers have a total average return of 1.8% and 0.7% respectively. Coleman has a success rate of 44.8% and is ranked #1849 out of 4143 analysts, while Powers has a success rate of 55.6% and is ranked #2041.

Overall, 2 research analysts have assigned a Hold rating and 2 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $71.00 which is 9.8% above where the stock closed yesterday.


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