Russia: Heineken N.V. is acquiring 100% of Russian brewery Patra

Netherlands’ brewing giant, Heineken N.V., announced on May 6 that it has signed an agreement to acquire 100% of Patra brewery in Yekaterinburg, Russia.

The transaction will be funded from available cash resources and is subject to regulatory approval. The acquisition will be earnings enhancing in 2005 and is value enhancing in 2010. As agreed by both parties the acquisition price will not be published.

As a result of this transaction, Heineken's market share in Russia will grow to 8.3% from the current 7.5%, with volumes over 7 million hectolitres, further strengthening Heineken's number three position in the world's fifth largest and rapidly growing beer market.

Jean François van Boxmeer, member of the Executive Board of Heineken N.V. commented: "The acquisition of the Patra brewery fits perfectly in Heineken's strategy of selectively acquiring value creating assets in growth markets. In Russia, Heineken continues its purchases of regional breweries with the latest acquisition in the economically important Urals region. Furthermore, the Patra brewery will further strengthen our ever-expanding infrastructure."

The Patra brewery is based in the number three city in Russia,Yekaterinburg, situated in the fast growing Urals region, which accounts for 17% of the total beer market. Following this acquisition, Heineken will gain a strong number 1 position in Yekaterinburg, growing from a 11% market share to a combined market share of 31%. The brewery has a sales capacity of 1.0 million hectoliters. The production capacity can be further increased up to 3 million hectoliters of sales. The portfolio consists mainly of the regional beer brands Patra, Strelets and Zhigulevskoye and soft drinks, which represent a total volume of 715,000 hectolitres of beer and 40,000 hectolitres of soft drinks in 2004. National market share is 0.8%, market share in the Urals region is 5% and in Yekaterinburg 20%.

Following this acquisition, Heineken in Russia holds a portfolio of the international and national brands Heineken, Buckler, Bochkarev, Ohota, Löwenbrau (the latter is brewed under license), Draught Guinness and Kilkenny (distribution from 1 July 2005) and the regional brands Shikhan, Sedoy Ural, Solyanaya Pristan, Okskoye, Volga, Rusich, Sobol, Patra, Strelets and Zhigulevskoye.

Heineken expects the Russian beer market to grow by 5.5% to over 89 million hectolitres in 2005.

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