21 Apr 2022 16:27

Carlsberg might sell Baltika to AB InBev Efes - newspaper

MOSCOW. April 21 (Interfax) - Denmark's Carlsberg Group, which has announced leaving Russia over the special military operation in Ukraine, might sell its Baltika brewing company to AB InBev Efes, a joint enterprise of Belgium's AB InBev and Turkey's Anadolu Efes, the Kommersant newspaper reported, citing sources.

Carlsberg Group has declined to comment, and AB InBev Efes "does not comment on rumors."

One Kommersant source suspects that Carlsberg Group has offered to sell Baltika to several interested parties. Among those named were major non-alcoholic beverage, snacks, and sweets producer Chernogolovka and Israel's CBC Group, structures of which sell the Carlsberg and Tuborg brands. Chernogolovka told the newspaper that it was studying all emerging opportunities for growth. One condition of the deal could be payment in foreign currency from the account of a non-Russian company in a foreign bank, and underutilization of breweries is complicating appraisal of Baltika, the source said.

A mergers and acquisitions consultant believes that transferring Baltika to AB InBev Efes is "the only prudent option," as AB InBev Efes is still on the market, is comparable in size, and has the necessary experience.

Founder of the Beru Vyhodnoy chain of beer stores Nikolai Zhelagin said that Baltika and AB InBev Efes have been in fierce competition on the Russian market in terms of price, for which they have huge budgets. If there is a merger, the need to invest in price will disappear, as beer from regional producers will be more expensive at any rate, Zhelagin said. AB InBev Efes will probably have to close several breweries where the geography of supplies intersects after buying Baltika, he said.

According to Anastasia Kayukova, a senior lawyer in the antitrust practice of Vegas Lex, the deal could be approved if the Federal Antimonopoly Service establishes that even if the merged company has a substantial share of the market, it does not, in fact, have market power.

Baltika is continuing to operate while the search for a new owner is underway. It operates eight breweries, where 55 brands of beer are produced, including Baltika, Don, Arsenalnoye, Zatecky Gus, and others. Baltika's revenue in 2021 grew 8.9% to 82.58 billion rubles, and its net profit fell 34.5% to 5.34 billion rubles.

AB InBev Efes operates 11 breweries in Russia and produces beer under the brands Klinskoye, Bely Medved, Sibirskaya Korona, Velkopopovicky Kozel, and others. The company's revenue rose 11% in 2021 to 85.38 billion rubles, and its net profit grew 150% to 5.03 billion rubles.

Baltika's share of the Russian beer market was about 27% in 2020, while AB InBev Efes had 30%, according to VTB Capital.