AB InBev sells stake in Russia for $1.1bn

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April 22, 2022 | 6:13 p.m.

Belgian brewer Anheuser-Busch InBev (AB InBev) is in talks to sell its stake in a joint venture with Turkish brewer Anadolu Efes that operates in Russia and Ukraine, a deal worth $1.1 billion for the company.

The maker of Budweiser, Stella Artois and Corona wants to sell Anadolu Efes its non-controlling stake in the AB InBev Efes joint venture, the Financial Times revealed.

However, it will continue to have an indirect stake in Russia as it owns a 24% stake in Efes, according to S&P Capital IQ, dating back to its acquisition of rival SABMiller in 2016.

This is the first significant example of a Turkish company stepping in to fill the void created by the exodus of Western brands from Russia, according to an analyst at a Turkish investment advisory group.

It may interest you to read: AB InBev profits fall 37% due to rising costs

The decision by the world’s largest brewer involves the suspension of the sale of the Budweiser beverage in Russia and the non-cash impairment charge as a result of the agreement.

Russia’s withdrawal from AB InBev comes at a time when numerous Western companies have abandoned or scaled back operations in the country in protest of the invasion of Ukraine, or sanctions and supply chain disruptions.

Effects of the transaction in doubt

For investment analysts, it is still too early to know whether the acquisition would be good for Anadolu Efes or not, as “it is not clear how consumption patterns will change in the Russian beer market, how the competitive environment will change,” he said.

In addition, the rating agency Fitch downgraded Anadolu Efes last March due to a “challenging macroeconomic environment in the company’s two largest markets, Turkey and Russia, as well as in Ukraine.”

Turkey, a member of NATO, has forged a close relationship with both Moscow and kyiv, which did not stop it from condemning the Russian invasion and supplying armed drones to the Ukrainian military.

However, the Eurasian country has also tried to maintain a “balanced” stance, in order to avoid damaging its economic, energy and defense ties with Russia.

Turkish officials have said they will not sign on to Western sanctions packages against Russia, while some Turkish companies and executives have said they see the withdrawal of Western companies as an opportunity.

Zero and three breweries go out

Edward Mundy, an analyst at Jefferies, said AB InBev’s decision came as no surprise, following announcements by Carlsberg and Heineken to pull out of Russia.

Carlsberg, which owns the Russian brewer Baltika and has proportionately more exposure to the country, plans to sell its Russian operation over the next year, hoping to make a $1.4 billion payback on the sale.

Heineken, for its part, estimates a amortization of 400 million euros for the unloading of its Russian operation.

Household products maker Reckitt Benckiser is also trying to sell its Russian business, while other consumer products makers including Nestle, the world’s largest food group, have reduced their sales in Russia to “essential” products. ”.

AB InBev’s Ukrainian brand Chernigivske will be sold to Efes as part of the deal.

Also read: Heineken and Carlsberg join the companies leaving Russia

With information from the Financial Times.

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