28 August 2023

Heineken sells Russian business for EUR 1 and books a loss of EUR 300 million

Netherlands | Heineken finally sold off its Russian business for EUR 1 – about USD 1.08 – nearly a year and a half after first pledging to do so.

The Dutch brewer said on 25 August it will take a loss of EUR 300 million on the division, which is being offloaded to Russia's Arnest Group, which makes aerosol cans and household chemicals.

Heineken announced it was leaving Russia in March 2022, shortly after the country had invaded Ukraine. However, the brewer faced severe criticism for launching new products into the Russian market in the following months. According to Heineken, this was necessary to keep the company attractive to potential buyers. In April 2023, the brewer announced it had found a buyer and was waiting for the Russian authorities to approve the sale. That permission has now been granted.

Arnest gives job guarantees for next three years

According to Heineken, the Arnest Group, a packaging and consumer goods business based in Stavropol, has taken over all assets, including seven breweries in Russia. Arnest has also given employment guarantees for the 1,800 employees for the next three years. Arnest will pay EUR 100 million (USD 108 million) in intra-group debt of the Russian business to Heineken in instalments.

“Recent developments demonstrate the significant challenges faced by large manufacturing companies in exiting Russia,” Heineken CEO Dolf van den Brink said. “While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the company in a responsible manner.”

Big international beer brands excluded from the deal

The Dutch brewer removed its Heineken brand from Russia last year and production of Amstel is to be phased out within six months. To get approval for the deal with Arnest, however, Heineken had to agree to license the Austrian beers Gösser and Edelweiss and the Czech beer Krusovice. While those will continue to be available in Russia, the brand names can only be used in Cyrillic and the license will expire in three years. Heineken will not provide brand support nor receive any proceeds.

The deal comes with no option to buy the business back.

Heineken reassured investors that the sale of its operations would have a negligible effect on the group’s earnings, and that its full-year forecast for earnings in 2023 was unchanged.

For Arnest, it was at least the second time it has picked up the Russian subsidiary of a Western company. In September 2022, Arnest acquired the Russian operations of Ball Corporation, the Colorado-based manufacturer of containers. The deal included three plants producing aluminium cans for beer and soft drinks in Moscow, St. Petersburg and the Chelyabinsk regions, Arnest said. In that case, Arnest paid USD 530 million.

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