(Bloomberg) -- Altria Group Inc. raised about $2.4 billion from the sale of Anheuser-Busch InBev SA shares, to help fund its own share repurchases. 

Altria, which sells Marlboro cigarettes in the US, sold 35 million AB InBev shares, in a mix of ordinary shares and American depositary shares, according to a statement. The ordinary shares were priced at €56.17 each and American depositary shares at $61.50 each, according to a statement Thursday, in the lower half of a marketed range.

Altria has also granted underwriters the option to sell an additional 5.25 million shares in an overallotment offering.

Separately, the brewer agreed to buy back 3.3 million ordinary shares from Altria for $200 million. The offering and buyback reduce Altria’s stake in AB InBev from about 10% to 8.1%, or 7.8% if the overallotment is fully exercised, the statement showed. 

The tobacco company announced a $2.4 billion increase to its existing $1 billion buyback program, and expects to complete it by the end of 2024, according to the statement. Altria expects to save money by spending less on dividends after the shares are repurchased.

AB InBev’s US shares were down 5% to $61.31 each as of 10:46 a.m. in New York, their largest decline in nearly two years. Altria shares rose nearly 1% to $43.72 each, the highest since September.

Analysts have for years speculated that Altria might sell the stake in AB InBev, which dates back to when Anheuser-Busch acquired SABMiller in 2016. 

“Over the decades of our ownership, the beer investment has provided significant income and cash returns and supported our strong balance sheet,” said Altria Chief Executive Officer Billy Gifford. He said the sale of about a fifth of its stake in AB InBev was an “opportunistic transaction” to generate a substantial return on its investment. 

Buyback Action 

Altria’s move comes just days after rival British American Tobacco Plc said it would sell as much as $2.1 billion of shares in Indian partner ITC Ltd. and use the proceeds to return cash to shareholders and invest in its business. The maker of Lucky Strike cigarettes has already made significant investments in research and development of alternative nicotine products. 

Read More: BAT to Start Buyback After Selling Up to $2.1 Billion of ITC

The fact that Altria’s selling some of the stake now, as competition heats up in cigarette alternatives, suggests it may also use some of the proceeds to develop its own products, said Bloomberg Intelligence analyst Kenneth Shea said.   

“That’s an awful lot of money for share buybacks,” Shea said. “Reading between the lines, they need that cash to help them accelerate their diversification efforts into non-combustible products.”

Altria’s alternative products include its NJOY vape products and On! oral nicotine pouches.

Altria’s placing of about 2% of its existing stake in AB InBev could lead to some short term volatility in the share price but ABI’s participation points to discipline in capital allocation decisions, according to Edward Mundy, an analyst at Jefferies.

“We do not rule out scope for further buybacks in the second half and beyond given balance sheet repair and AB InBev’s growing cashflows,” he said. 

(Updates with detail on proceeds in first paragraph, buyback plans in fifth paragraph and share price in sixth. A previous version corrected spelling of Marlboro in first deckhead.)

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