UST, a subsidiary of Altria Group, has agreed to sell its Ste Michelle Wine Estates business to private equity firm Sycamore Partners Management in an all-cash deal worth around $1.2bn.

The deal, which includes the assumption of certain Ste Michelle liabilities awaits antitrust regulatory clearance and is also subject to Sycamore Partners securing the necessary funding.

Completion of the deal is expected in the second half of 2021 if these conditions are fulfilled.

Based in Washington in the US, Ste Michelle offers a wide range of wines to its customers.

Ste Michelle’s president and CEO David Dearie said: “The Ste Michelle leadership team and I look forward to working with the team at Sycamore Partners and believe we are well-positioned to drive the next phase of our growth.”

Altria, which has a portfolio of tobacco products, plans to utilise net cash proceeds from the divestiture for additional share repurchases. This is subject to the nod of the company’s board.

Commenting on the transaction, Altria CEO Billy Gifford said: “We believe the Transaction is an important step in Altria’s value creation for shareholders and allows our management team greater focus on the pursuit of our Vision to responsibly transition adult smokers to a non-combustible future.

“Ste Michelle and its talented employees have built an outstanding portfolio of premium wine brands, and we wish them future success.”

Altria said that it will record any gain or loss on the deal and related disposition items in the second half of this year.

However, the company does not expect the amount to be material.

For this deal, Credit Suisse Securities (USA) represented Altria as a financial adviser while White & Case offered legal counsel to Altria.