Danish brewer Carlsberg Group expressed its shock at the Russian government’s decision to impose temporary management over its assets in the country. Carlsberg has been operating eight production facilities in Russia and had announced its exit from the country in March 2022. The Russian government’s move comes in the wake of last month’s order by President Vladimir Putin to freeze the Russian assets of Carlsberg’s subsidiary, Baltika Breweries.
In response to the unexpected development, Carlsberg Group CEO Cees ‘t Hart stated that the company is assessing the situation and the legal consequences. He also emphasized the company’s commitment to protecting its assets and the value of its business. Despite the challenges posed by the Russian government’s intervention, Carlsberg still hopes to sell off its operations in the sanctions-hit country.
The temporary control of Carlsberg’s assets in Russia involves handing over all foreign shares of Baltika Breweries to the Russian Federal Property Management Agency. This decision affects more than 99% of the shares within Baltika Breweries’ registered capital. The Russian government’s actions have raised concerns about the impact on parts of Carlsberg’s continuing business and structures outside of Russia.
Carlsberg Group had already taken a significant write-down on its Russian subsidiary, Baltika, last year, amounting to 9.9 billion krone ($1.5 billion). While the Danish beverage giant still retains ownership of Baltika, it no longer has any control or influence over the unit.
Carlsberg CEO Cees ‘t Hart clarified that the Russian government’s action does not technically amount to nationalization. However, it remains unclear how the situation will unfold. The recent development has added to the difficulties of Carlsberg’s planned exit from Russia.
The net loss from Carlsberg’s Russian operations put up for sale is reported to be 404 million krone ($59 million). As of July, Baltika Breweries will be deconsolidated.
Carlsberg Group continues to navigate the uncertain conditions in Russia and remains hopeful of achieving a disposal of its business in the country. The company will work to protect its assets and the value of its business throughout the process.
The Russian government’s temporary control over Carlsberg’s assets in Russia adds further complexity to the company’s exit strategy. Carlsberg Group will closely monitor the situation and make decisions accordingly to ensure the best outcome for its shareholders and stakeholders.
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In conclusion, Carlsberg Group has been taken aback by the Russian government’s temporary control over its assets in the country. The company is still hopeful of selling off its operations in Russia despite the uncertain conditions. The Russian government’s actions have raised concerns about the impact on Carlsberg’s business both within and outside of Russia. Carlsberg will assess the situation and take steps to protect its assets and the value of its business. The company had already experienced a significant write-down on its Russian subsidiary, Baltika, and now no longer has control or influence over the unit. While technically not nationalization, the Russian government’s move complicates Carlsberg’s planned exit from Russia. The company will continue to navigate the challenging environment and work towards achieving a disposal of its business in the country.