The Carlsberg Group has concluded its divestment from Russia by finalizing the sale of its shares in Baltika Breweries to VG Invest, a local firm managed by two senior employees of the brewery. This strategic exit marks the end of Carlsberg's tumultuous Russian business chapter and aligns with the company’s long-standing objective to leave the market after Russia’s invasion of Ukraine in 2022.
Key Details of the Sale
· Baltika's Assets Transition: As part of the deal, Baltika Breweries transferred its minority stakes in Carlsberg Azerbaijan (9%) and Carlsberg Kazakhstan (10%) back to Carlsberg Group.
· Cash Consideration: Carlsberg will receive USD 320 million from the transaction.
· Management Buy-Out: VG Invest, the new owner, is equally controlled by two longstanding Baltika employees, who will assume the roles of General Manager and Deputy General Manager.
· Regulatory Approvals: The deal has been approved by both Danish and Russian authorities.
Jacob Aarup-Andersen, CEO of Carlsberg, commented, “This transaction concludes a challenging chapter in our history. It allows us to settle legal disputes, including intellectual property issues, while ensuring a degree of continuity for Baltika employees and stakeholders. Given the circumstances, this is the best achievable outcome for our company.”
A Complex Exit Process
Since July 2023, when a Russian presidential decree temporarily transferred control of Baltika Breweries to the state (inside.beer, 16.7.2024), Carlsberg faced heightened regulatory and operational challenges. The company was compelled to terminate licensing agreements with Baltika, severing rights to Carlsberg’s brands in Russia (inside.beer, 3.10.2023). The situation culminated in CEO Aarup-Andersen publicly accusing the Russian authorities of "stealing" their business after the seizure (inside.beer, 1.11.2023)
Broader Context: Brewing Industry Challenges in Russia
Carlsberg’s experience reflects the broader difficulties faced by international brewers in Russia. Earlier in 2024, Russian authorities blocked AB InBev’s attempt to divest its joint venture stake in Russia to Anadolu Efes (inside.beer, 8.8.2024) , highlighting the regulatory hurdles foreign companies encounter in the country. Many international brewers, including Carlsberg, have either exited or drastically scaled down their Russian operations in light of the war in Ukraine and increasing scrutiny.
Financial Implications
Analysts from Citi predict that the cash inflow and reduced minority stakes could have a low single-digit (LSD) positive impact on Carlsberg’s earnings per share (EPS) in 2025. Details about the financial impact of the sale will be disclosed in Carlsberg’s 2024 Annual Report.
