Russia: InBev might acquire Tinkoff’s Company

Sun Interbrew, the second largest beer maker of Russia, is on the edge of acquiring Russia’s Tinkoff brewery based in St. Petersburg, Russian daily, Kommersant, communicated on June 2. They learnt that Sun Interbrew was negotiating the acquisition of Tinkokff’s breweries and the brands pertaining to Mr. Tinkoff. The deal is estimated to cost up to $300 million, according to the daily.

Kommersant cited analysts as saying that “Oleg Tinkoff has chosen the right time to leave the industry as the competition is getting stiffer and Tinkoff company is burdened by substantial debts to be paid off this year.”

Sun Interbrew and Tinkoff declined to comment. Oleg Tinkoff, for instance, told Kommersant: “This is the case when I can say ‘no comment’.” However, Inbev said yearlier it was looking to expand in Russia. Analysts said Sun Interbrew experience a great shortage of productive capacities. Peter De Neve, an analyst for Belgian broker Petercam, said he was not surprised by the news. "It (Russia) is a big priority," he said.

The strong growth of the Russian beer market has attracted some of the world's top players. Competition for market share is heavy, putting pressure on beer prices.

Several brewing companies reported to Kommersant the deal between Sun Interbrew and Oleg Tinkoff is in the completion stage. Sun Interbrew has already signed a preliminary agreement to buy Tinkoff, anonymous sources close to the deal told Kommersant. However, Mr. Tinkoff still keeps the restaurants.

According to Kommersant, besides money, Oleg Tinkoff will get a stake in Sun Interbrew and a seat in the company’s board of directors. It seems that Mr. Tinkoff will keep managing his assets for some time.

Tinkoff Group of Companies embraces two breweries based in Pushkin (outside St. Petersburg) and a chain of eight restaurants. The total capacity of the breweries is 22.5 million dekalitres. The company’s turnover amounted to $42.5 million last year, 1.7 dekalitres of beer was sold last year. Tinkoff’s share of market averages to 1 percent in value terms, according to Business Analitika. The company’s main brands are Tinkoff, Tequiza, Zooom, T.

Sun Interbrew holding comprises seven breweries in Russia. The company sold 205 dekalitres of beer in 2004. The earnings of Sun Interbrew amounted to €691.3, according to US GAAP. Its share of the market in value terms amounts to 16.4 % (second place after BBH), according to Business Analitika. Sun Interbrew is represented by such brands as Klinskoye, Tolstyak, Sibirskaya Korona, Staropramen, Stella Artois, Beck’s and Brahma.

Analysts calculated that the second largest operator in the brewing market will pay for the business of Mr. Tinkoff at least $300 million. “Tinkoff costs $240 - $260 million,” says Marat Ibragimov, analyst with Uralsib. “But Mr. Tinkoff is sure to claim a certain bonus taking into consideration the fierce competition on the market and the renown of his brand.”

However, if the deal is closed, Sun Interbrew will get not only Tinkoff’s breweries, but its debts too. According to the investment memorandum, the sum total of Tinkoff Group of Companies’s debts is over $100 million. It should be noticed that the company is supposed to pay out $73 million this year.

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