Russia: Taranov is being put up for sale at around $400 million

Russian beer maker, Ivan Taranov, is being put up for sale in an auction that is likely to value the Moscow-based brewer of Pit and Three Bears beers at around $400 million, Reuters cited sources close to the situation saying on Friday, July 1.

Russia is one of the world's fastest growing beer markets, and most big international brewers are looking to expand in what has quickly become the globe's fifth biggest beer market after China, the United States, Germany and Brazil.

Major brewers Belgian-based InBev, Dutch Heineken, London-based SABMiller and Efes Breweries International NV are among a field of five looking at Russia's seventh biggest brewer, the sources added.

The pace of takeovers in the Russian beer market is hotting up with the world's biggest brewer InBev close to buying St Petersburg-based Tinkoff, and Heineken set to scoop up Stepan Razin, also in Russia's second city, sources said.

Taranov's beer brands include Konigsberg and Doctor Diesel, and it also brews licensed brands such as Bavaria, Gossen and Coors to give it a 4.4 percent share of the Russian beer market by volume and about 4.5 percent by value.

Although based in Moscow, Taranov has three breweries spread across Russia from Khabarovsk in Russia's far east, just north of Vladivostok, Kaliningrad on the Baltic Sea and Novotroitsk in Siberia, and also nationwide beer distribution.

It made earnings before interest, tax, depreciation and amortisation (EDITDA) of $30 million in 2004 and is forecast to make EBITDA of $40 million in 2005. With brewing capacity of 4.5 million hectolitres a year, it would cost just under $100 a hectolitre at the assumed $400 million price tag.

Taranov is owned 62 percent by Allied Partners run by Russian entrepreneurs Eugene Kashper and Alexander Lipshifts and 38 percent by U.S. private equity group Texas Pacific.

Investment banks Lehman Brothers and Renaissance Capital were brought in to advise the group on its future options, and have concluded that a sale is the best option.

Firm offers are due by the second week in July, and the sale could be completed by August, the sources added.

In the fast-growing Russian beer market, which has seen beer volumes grow 10 percent a year over the last five years, InBev and Heineken are looking to close the gap on Russian market leader Baltic Beverage Holding (BBH).

BBH, jointly owned by Britain's Scottish & Newcastle and Denmark's Carlsberg and with a majority stake in Russia's biggest brewer Baltika, recently pushed its Russian market share up to 36.1 percent.

InBev is set to buy St Petersburg brewer Tinkoff for around $200 million to consolidate its number two position where it has a 16 percent share of the market, sources have said.

In addition, Heineken is close to confirming it has bought another St Petersburg brewer, Stepan Razin, to boost its current 9 percent share of the market to over 10 percent, and comes after it bought the Patra brewery in the Urals in May.

Analysts said the rash of moves is seeing attention moving to the future of Russia's last two biggest independent brewers Kazan-based Krasny Vostok and Moscow-based Ochakovo, which the big brewers are circling and considering takeover deals.

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