Heineken has finally sold its Russian operations, at a loss of €300mn, after criticism of the time it took the Dutch brewing group to exit the country following Russia's full-scale invasion of Ukraine.
Heineken will sell the business, which has seven breweries and 1,800 employees, to Russian manufacturer Arnest Group for €1. The deal would result in an expected loss of €300mn, the company said on Friday.
Although many European companies announced plans to sell or close their Russian operations after the invasion, some have been slow to withdraw, citing the scale of operations or the need to protect staff still in the country.
The brewer has already pulled brands including Heineken, Miller and Guinness from Russian shelves, although Amstel has remained on sale in part to keep the local business afloat, and new products have been launched by local management.
“While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner,” Chief executive Dolf van den Brink said on Friday.
Yale professor Jeff Sonnenfeld, who created a global list of foreign companies that trade in Russia, has accused some western groups that have not left the country of breaking their promises.
In response to his criticism this year, Heineken said it had been working hard to transfer its business to a buyer in challenging circumstances.
The Russian business was ringfenced and self-funding, it added, with no exchange of funds between Heineken and the local operation. The deal has taken months to gain regulatory approval.
Van den Brink said that the priorities were to safeguard local employees, prevent assets from being taken by the Russian state and avoid any suggestion that the company would make a profit.
“I wish we would have been able to close this deal many months before,” he added. “There was a real risk for legal prosecution of our local people, there was a real risk of nationalisation.”
As part of the deal, Heineken said there would be a three-year licence for “some smaller regional brands which are required to ensure business continuity and secure transaction approval”.
But it said it would provide no brand support and receive no proceeds, royalties or fees from Russia. There is no option in the agreement for a buyback or other return to Russia.
Arnest Group has agreed to repay the historical intercompany debt of the Russian business of €100mn due to Heineken in instalments. The Dutch brewer said its full-year 2023 outlook would not be affected by the sale.
The business, which produced about 10mn hectolitres of beer, represented about 4 per cent of global volumes. “It was key to get the vast majority of our international brands out because we didn’t want them to stay in the country,” Van der Brink said.
This article was written by Daniel Thomas from The Financial Times and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.