(Bloomberg) -- Altria Group Inc., fresh off of its first euro bond offering in two decades, is turning to the U.S. market to help finance its foray into the booming e-cigarette market.
In an offering that may surpass $12 billion, the tobacco giant plans to sell senior unsecured bonds in as many as seven parts, according to people with knowledge of initial discussions. That would be the second-largest deal of the year behind Anheuser-Busch InBev NV’s $15.5 billion sale last month to refinance SABMiller debt.
The longest portion of Altria’s offering, a 40-year security, may yield around 3.45 percentage points above Treasuries, said another person with knowledge of the matter, who asked not to be identified as the details are private.
Altria, famous for its Marlboro cigarettes, is diversifying into areas away from its tobacco roots in search of higher-growth businesses. It’s paying $12.8 billion for a 35 percent stake in e-cigarette maker Juul Labs Inc., and recently invested $1.8 billion in Canadian pot company Cronos Group Inc. to diversify into the cannabis industry.
The deal with Juul has drawn scrutiny from the U.S. Food and Drug Administration amid concerns about underage use of vaping products. European investors seemed undeterred, as Altria sold 4.25 billion euros ($4.8 billion) across four tranches on Monday to help fund the transaction, its first euro offering since 1999. The company held calls with investors in both the U.S. and Europe to market the deal last week.
Barclays Plc, Citigroup Inc., JPMorgan Chase & Co. and Mizuho Financial Group Inc. are managing the sale, according to one of the people.
--With assistance from Allan Lopez, Esteban Duarte, Brian Smith and Natalya Doris.
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