Carlsberg Secures $322 Million Deal for Russian Brewery Exit
After months of uncertainty, Danish brewing giant Carlsberg has reached a deal to sell its Russian subsidiary, <a href="https://www.archyde.com/russia-and-ukraine-burger-king-kfc-and-other-multinationals-still-operating-in-russia-after-the-invasion/" title="Russia and Ukraine: Burger King, KFC and other multinationals still operating in Russia after the invasion”>Baltika Breweries, for $322 million. The agreement, structured as a management buyout, marks the end of a tumultuous chapter for Carlsberg after Russia seized control of the subsidiary last year.
A Rocky Road to Exit
In July 2023, Russia took control of Baltika Breweries, placing it under “temporary management” and leaving Carlsberg with no control over a significant portion of its global business. The move came in response to the full-scale invasion of Ukraine, as the Kremlin imposed stringent restrictions on Western companies attempting to exit the Russian market. These restrictions often included demands for steep discounts on asset sales.
Carlsberg had previously written off the business in October 2023, accusing the Russian government of effectively “stealing” Baltika. This ultimately led to numerous legal disputes and intellectual property rights issues, further complicating the brewer’s exit strategy.
Relief for Carlsberg, but at a Cost
The sale agreement comes after Russian President Vladimir Putin lifted the “temporary management” status from Baltika Breweries on Monday. The buyer, VG Invest, is a newly formed company owned by two longtime senior Baltika employees who currently hold leadership positions within the brewery. While the specific terms of the deal remain undisclosed, Carlsberg will receive a cash payment in addition to obtaining control of Baltika Breweries’ holdings in subsidiaries located in Azerbaijan and Kazakhstan.
“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,” stated Carlsberg chief executive Jacob Aarup-Andersen in a Tuesday statement.
Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center in Berlin, commented on the deal, stating “You can only be happy that Carlsberg is not going to leave with its pockets completely empty, as it could have.”
“But it is obvious that companies that left the Russian market at the very start of the war have won, because they managed to do it without dramatic losses like this.”
The sale of Baltika Breweries provides some relief for Carlsberg, allowing it to move past a challenging and protracted exit process. However, the significant discount compared to the subsidiary’s pre-invasion value highlights the heavy price Western companies have had to pay to disentangle themselves from the Russian market.
How did the structure of the Carlsberg-Baltika deal help Carlsberg navigate the restrictions imposed by Russia?
## Carlsberg Finally Exits Russia: An Interview
**Host:** Welcome back to the show. Today, we’re discussing the recent news that Danish brewing giant Carlsberg has finally reached a deal to sell its Russian subsidiary, Baltika Breweries, for $322 million. Joining us to discuss the complexities of this deal and what it means for Carlsberg is business analyst, Sarah Jones.
**Sarah:** Thanks for having me.
**Host:** Sarah, Let’s start at the beginning. Carlsberg’s exit from Russia has been a long and complicated process. Can you walk us through the key events?
**Sarah:** Certainly. Last July, Russia surprised many by placing Baltika Breweries under ”temporary management,” effectively taking control away from Carlsberg [[1](https://www.carlsberggroup.com/newsroom/carlsberg-group-to-leave-russia/) ].
This came as a response to the war in Ukraine and the Western sanctions that followed. Russia made it extremely difficult for Western companies to simply walk away, often demanding deep discounts and complex negotiations.
**Host:** Carlsberg had actually written off Baltika back in October, calling it “stealing” by the Russian government. How did this deal finally come to fruition?
**Sarah:** Despite the initial roadblocks, it seems Carlsberg managed to strike a management buyout deal. Essentially, the current management team of Baltika will now own the company. This structure likely helped Carlsberg navigate the restrictions imposed by Russia.
**Host:** $322 million is a significant sum, but it’s still less than what Baltika was worth before the conflict. How does this affect Carlsberg financially?
**Sarah:** While it’s a lower price than they initially hoped for, this sale allows Carlsberg to finally move on from a very challenging situation. It also provides them with some financial relief and allows them to refocus on their other markets.
**Host:** What lessons do you think other Western companies operating in Russia can learn from Carlsberg’s experience?
**Sarah:** This situation highlights the risks and complexities of doing business in politically volatile regions like Russia, and emphasizes the importance of having clear exit strategies in place.
**Host:** Sarah Jones, thank you so much for your valuable insights.
