Altria Group (NYSE:MO) Keeping Stake in SABMiller (LON:SAB)

Under pressure for some time to divest of its stake in SABMiller (LON:SAB) by a number of analysts, Altria Group (NYSE:MO) has rejected that pressure and announced it plans on keeping its 27.3 percent stake in SABMiller for the time being.

Some of the argument is the company is outside of its core cigarette and smokeless tobacco business, and SABMiller makes no sense in that regard.

But chief executive officer of Altria, Michael Szymanczyk and CFO Dave Beran, explained that it isn't the sales and product lines that are the major reason they're keeping their stake in SABMiller, but rather its for the financial strength of the company.

There would also be the big tax hit the company would take if they sold their stake in the brewer as well, making it a bad short-term move at the least.

Szymanczyk has also been trying to convince people there are synergies between the wine business of Ste. Michelle and their core tobacco business, but there was no suggestion or enlightenment as to what that would be by the CEO.

Concerning the financial benefits to holding their shares in SABMiller, the executives stated it makes the assets of Altria much stronger on their balance sheets, which effectively reduces the costs of borrowing capital. It of course also adds to the earnings of the company as well.

Taking into account the economic times with live in, this actually makes sense, and in a tight credit market this could indeed cut the costs of doing business significantly for Altria, and as far as the shares in SABMiller, it has no interference in the operations of Altria other than having to keep on top of how SABMiller is doing.

One benefit would of course be to generate a sizable chunk of capital the company could use for other purposes, but when adding up the taxable event and the extra costs in loans, it's not a lucrative and beneficial as it looks on the outside.