12 January 2024

Efes to buy out AB-InBev in Russian joint venture

Russia | After nearly two years of negotiations, Turkish brewer Anadolu Efes agreed to acquire AB-InBev’s stake in their USD 1.3 billion Russian joint venture. This makes AB-InBev the last major Western brewer to officially exit the country.

Anadolu Efes will become the sole owner of a group it formed with AB-InBev in 2018 to sell beer in Russia and Ukraine, according to a regulatory filing on 26 December 2023. In 2019, AB-InBev-Efes overtook Carlsberg’s Baltika as the beer market leader by volume sales in Russia.

No cash will change hands, but Anadolu Efes will make future payments based on the joint venture’s performance, the filing to Turkey’s Capital Markets Board said. The transaction still needs to be approved by Russia’s authorities.

Near endless talks

In April 2022, AB-InBev announced it was in talks with Efes to sell its stake in AB-InBev-Efes, the Russian joint venture. Like many Western companies AB-InBev felt pressured to exit Russia following the invasion of Ukraine.

After announcing its intention to leave Russia, AB-InBev said it was forfeiting “all financial benefit” from the joint venture and reported a USD 1.1 billion impairment in its 2022 first-quarter earnings.

It is unclear why talks between AB-InBev and Efes dragged on for as long as they did. AB-InBev could have easily gifted its stake to Efes last year when it took the impairment charge. Pundits can think of three explanations: one, AB-InBev secretly wanted to dig in and not leave Russia. Two, Efes proved a tough negotiator and refused to compensate AB-InBev for its stake, while securing its profitable licences. A third possible explanation is that they saw what happened to Heineken and Carlsberg and got cold feet. Not wanting to give Mr Putin any pretext to pull them into his power games, they finally decided that AB-InBev had better leave the scene.

The numbers

AB-InBev-Efes operates eleven breweries and three malting plants across Russia. According to the Russian news agency Interfax, the joint venture, in 2022, increased its revenue to RUB 97.5 billion (USD 1 billion), from RUB 85.4 billion in 2021, while net profit rose to RUB 12.2 billion (USD 140 million), from RUB 5 billion, respectively.

Their joint venture in Ukraine remains in force. Separately, AB-InBev owns just under a quarter of the broader Anadolu Efes group. In addition to marketing alcoholic beverages, Istanbul-listed Anadolu Efes also controls a large soft-drinks business that bottles Coca-Cola products.

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