Business 25 August 2023, 10:00am

Heineken exits Russia, divests all its assets for €1

Portfolio

As a result of a long process, Heineken is pulling out of Russia and has sold its assets to a local company for just one euro. Although the company expects to incur a one-off cost of €300 million due to the exit, the transaction will have a negligible impact on its full-year outlook, they said.

Heineken announced that it has completed its withdrawal from Russia. The company has sold its Russian operations to a local company, Arnest Group, for a symbolic amount of one euro. The sale is expected to result in a one-off loss of around €300 million for Heineken, the world's second-largest beer producer. The company had originally announced its intention to leave Russia earlier this year, but admitted the process had taken longer than expected due to the significant challenges facing large manufacturing companies.

In a statement, CEO Dolf van den Brink highlighted these difficulties, noting that recent developments underline the complexity of exiting Russia. This comes at a time when many multinational companies are seeking to exit the country following unprecedented sanctions imposed by Western countries. However, these efforts have been met with resistance from the Kremlin, which has responded by seizing certain assets. Russian President Vladimir Putin, for example, signed a decree in July authorising the takeover of the Russian subsidiary of French yoghurt producer Danone and of Carlsberg's stake in a local brewery.

Before its withdrawal, Heineken operated seven breweries in Russia and employed around 1,800 people, who are guaranteed employment with the Arnest Group for three years. The Dutch beer producer already stopped production of its Heineken brand in Russia last year and plans to phase out Amstel within six months.

Heineken said that the deal, which does not include an option to buy back the assets, includes a three-year licence for some smaller regional brands for which Heineken will not provide brand support and will not receive any revenue.

Arnest Group also has a significant canned food packaging business and is the largest Russian aerosol producer, as well as a distributor of cosmetics and household products.

Heineken believes that the transaction will have a negligible impact on its full-year outlook.

Heineken is down 0.3% today and up 0.8% this year.