The deal between Carlsberg and Anadolu Efes to sell eight Baltika breweries in Russia may close in the first half of 2023, two sources close to the talks between the two companies told Vedomosti. One of them claims that the parties have reached an agreement in principle and are now developing an agreement. An investment analyst who worked with one of the companies also knows about this.
A spokesperson for AB InBev Efes (a joint venture between AB InBev and Anadolu Efes) said the group does not comment on the rumors. Carlsberg did not respond to a request.
AB InBev Efes operates 11 breweries in Russia, it produces beer under the brands Klinskoe, Beliy Medved, Sibirskaya Korona, Velkopopovicky Kozel and others. AB InBev Efes JSC revenue in 2021 increased by 11% to 85 .38 billion rubles, net profit – 2.5 times to 5.03 billion rubles.
Carlsberg announced its intention to sell Russian assets in March 2022. At the same time, it stopped the production of beer in our country under the flagship Carlsberg brand. The fact that AB InBev Efes is negotiating the acquisition of Baltika plants from this group was reported by the Kommersant newspaper in April last year.
Until February 2022, Carlsberg’s Russian portfolio included 55 beer brands, including Carlsberg, Tuborg, Holsten, Kronenbourg 1664, Baltika, Don, Arsenalnoe, Somersby, Zatecky Gus, etc. In a deal with Anadolu Efes domestic brands will enter, Vedomosti sources know.
As for international brands, it is beneficial for the Danish holding to keep the licensed production of those that are still represented in Russia and whose production has not stopped due to political pressure, says Daniil Briman, chairman of the board of the Union of Russian Brewers. The Danish company did not consider offers to sell assets in installments or at a very large discount, says one of Vedomosti’s interlocutors close to one of the parties to the negotiations. The latter, according to him, came from one of the Chinese investment funds.
According to the results of 2022, the revenue of eight Russian Carlsberg plants amounted to 10.2 billion Danish kroner (110.8 billion rubles at the exchange rate of the Central Bank), having increased by 1.6 times over the year.
The company itself estimated the value of its net assets in our country in its annual reports for 2022 at 7.5 billion Danish kroner (81.2 billion rubles). She tried to raise about the same amount from the sale of the Baltika plants, which is “completely unrealistic in the current circumstances,” says an employee of one of the brewing companies. An investment analyst who worked with one of the participants in the negotiations says that the deal will amount to 3–4 EBITDA of the factories over 12 months, which is about 20 billion rubles. In any case, this is more than the Chinese investment fund offered, he said.
At 81.2 billion rubles. estimated the company itself the value of its net assets in our country in the annual report for 2022.
The deal between Carlsberg and Anadolu Efes has yet to be approved by the Federal Antimonopoly Service (FAS), and here the parties may face difficulties, experts interviewed by Vedomosti say. If Baltika is bought, the Turkish company’s share on the Russian beer market is likely to exceed 50%, which will lead to its dominant position, Anna Kononova, head of the antimonopoly practice of the Tsentralny Okrug law firm, notes. This is confirmed by Vedomosti’s own calculations. AB InBev Efes in 2022, according to the EGAIS system, produced 223.29 million decaliters of beer, and Baltika plants – 197.4 million decaliters.
Considering that, according to Rosalkogolregulirovanie, the total production of beer and beer drinks in Russia last year amounted to 802.54 million decalitres, the share of the first is 27.6%, the second – 24.3%, i.e. cumulatively 51.9% . At the same time, according to Kononova, it does not matter who exactly will act as a buyer – a Turkish legal entity or its Russian “daughter”. The companies are affiliated and are in the general group of persons, so the need to obtain prior consent from the FAS remains in any case, the expert says.
If the transaction leads to the dominant position of the buyer, the antimonopoly service has grounds for refusing to approve the transaction, Kononova points out. But, according to her, recently there have been several examples when the FAS allowed the acquisition by Russian companies of the assets of the closest competitors. For example, Yandex.Eda became the owner of Delivery Club last year, their total market share in the prepared food market was estimated by analysts at 75–77%. For such transactions, the antimonopoly service is likely to require certain conditions to be met, the lawyer continues. According to her, in the case of Carlsberg and Anadolu Efes, this may be the approval of trade and pricing policies, a change in the sales structure of certain brands of beer depending on the region, and so on.
The FAS representative said that the service has not yet received applications from Carlsberg and Anadolu Efes.
Among the additional difficulties for the implementation of this transaction, experts also name the possible need to obtain the consent of the government commission because of the transaction involving a company from an unfriendly country, adds Kononova. According to her, this is a very long and uncertain procedure.
For the Russian market, the purchase of a competitor’s assets by one transnational company will not do anything good, Alexei Nebolsin, a member of the presidium of the Opora Rossii public organization, believes. In his opinion, if the factories were bought by domestic or Chinese businesses, this would be more positive, since at the moment “the entire policy in the local beer market is determined by companies whose decision-making center is located abroad.”
But apart from investment companies or banks, few Russian companies are able to buy such a large asset in its entirety, Briman notes.