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25 Aug, 2023 14:45

Beer giant sells Russian assets for one euro

Heineken’s local breweries will transfer ownership to Russian consumer goods maker Arnest Group
Beer giant sells Russian assets for one euro

Dutch multinational Heineken, the world’s second-largest brewer, has finalized its exit from the Russian market, the company announced on Friday.

According to a statement on the company’s website, its assets have been acquired by Arnest Group, a Russian manufacturer of cosmetics and household goods, which also owns a major can packaging business.

The deal was worth a symbolic €1 for 100% of the shares. The transaction received all the required approvals from the Russian authorities, the company said, and “concludes the process Heineken initiated in March 2022 to exit Russia.

All remaining Heineken assets in the country, including its seven local breweries, will transfer to the new owner. The deal did not include an option for Heineken to buy the business back. The sale brought Heineken “an expected total cumulative loss of €300 million [$324.8 million],” according to the company.

Arnest Group provided job guarantees for Heineken’s 1,800 local employees for the next three years. The company has also pledged to repay the historical intercompany debt of the Russian business to the Dutch brewer of around €100 million.

Heineken announced its intention to exit Russia along with many other international brands in March 2022, amid Western sanctions on the country in connection with the conflict in Ukraine. Heineken’s namesake beer brand disappeared from Russia shortly thereafter. In April this year, the brewer announced it had found a buyer for its Russian business and applied for regulatory approval of the sale. In July, the company reported a depreciation of its assets in Russia by €201 million.

Heineken said the production of its Amstel beer brand will be phased out in Russia within the next six months. Some smaller regional brands will retain a three-year license and will continue to be produced at Heineken’s former breweries, “to ensure business continuity and secure transaction approval.” However, Heineken will not provide brand support or receive any earnings from the sales of these products.

Last month, the Russian authorities took temporary control of the local assets of another international beer manufacturer, Danish Carlsberg Group, which owns Baltika Breweries. The assets were handed over to the Russian Federal Property Management Agency after the company announced it planned to divest from the country and found a buyer. Heineken CEO Dolf van den Brink said the situation with Carlsberg “showed there was a real risk of nationalization” and forced his company to speed up the sale of its local business.

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