Carlsberg Sells Its Russian Business to VG Invest

The Carlsberg Group on Tuesday announced divestment of its entire stake in Baltika Breweries to a new company VG Invest. As part of the agreement, Baltika Breweries will transfer all its shareholdings in Carlsberg Azerbaijan and Carlsberg Kazakhstan, 9% and 10% respectively, to the Carlsberg Group.

Baltika Breweries is the second largest brewing company in Europe and the leader of the Russian beer market with over 38% market share. The announcement came a day after Russian President Vladimir Putin signed a decree ending the government control of the firm.

The government issued the decree to place Baltika Breweries under the control of “temporary management in July 2023, a month after Carlsberg announced its plans to wind up its Russian business.

Baltika Breweries is no longer placed under temporary management from Monday by the Russian state, and the current external management, who has been managing the firm’s affairs since July 2023, will leave their positions.

According to Reuters, the Russian government has approved the $320.75 million deal. By this divestment, Carlsberg joined a host of companies that have exited their businesses from Russia following its invasion of Ukraine in February 2022.

In a February 2023 report, Carlsberg said its net assets in Russia as of December 2022 were worth $1.06 billion, the Reuters report said.

The transaction is expected to close within the next couple of days. The Carlsberg Group, which is based in Denmark, will receive a cash consideration as well as Baltika Breweries’ shareholdings in Carlsberg Azerbaijan and Carlsberg Kazakhstan. More details about the financial impact will be released in the Group’s 2024 annual report.

Carlsberg Group CEO Jacob Aarup-Andersen said that since their announcement to exit Russia in 2022, the company has exhausted all options to find a way to achieve a full exit from Russia while protecting its employees, its assets and the value of the Carlsberg business.

“With today’s announcement, we will settle numerous lawsuits and IP rights issues related to Baltika Breweries. Considering the circumstances, we believe it is the best achievable outcome for our employees, shareholders and the continued business,” he said.

VG Invest Takes Control

The deal will be a management buy-out and the new controlling shareholder of Baltika Breweries will be VG Invest, which is owned equally by two longstanding Baltika employees, currently holding leading positions in the company. The two individuals will take over the management of Baltika Breweries as General Manager and Deputy General Manager, respectively.

Prior to completion, the sale has been approved by both Danish and Russian authorities. With the divestment, Carlsberg Group will no longer have any ownership of shares in Baltika Breweries.

The sale will put an end to a period of uncertainty since a presidential decree in July 2023 temporarily transferred the control of Baltika Breweries to the Russian state. The Carlsberg Group subsequently decided to impair the full value of its Russian business and terminate the license agreements allowing Baltika Breweries to produce, market and sell Carlsberg’s brands.

As part of the agreement, the parties will settle all outstanding legal disputes, including IP rights issues.