Russia: Yarpivo merges with Voronezh brewery

Yarpivo Brewery, one of the biggest players on the Russian beermarket, based in Yaroslavl and the Voronezh-based Voronezh Brewery have merged in spite protests from minority shareholders, the two breweries said. The single government register of legal entities registered the end of activities by the Voronezh Brewery on October 19, Interfax agency reported on November 9.

According to a recent decision by Yarpivo shareholders, the company will be "the legal successor of all rights and liabilities of the Voronezh Brewery from the moment the end of activities is registered in the single government register."

Voronezh Brewery cessed its activities after an extraordinary shareholders' meeting decided on June 14, 2005 to reorganize by merging with Yarpivo, the Voronezh Brewery said. The merger agreement was signed by both parties on April 28, 2005. Under the agreement, the Voronezh Brewery's assets, which were 1.15 billion rubles on March 31, 2005, will be transferred to Yarpivo.

Voronezh Brewery holds assets worth 17.59% of the value of Yarpivo assets, Yarpivo said. Yarpivo owns 80% of the Voronezh Brewery. The purchase price for common named shares in the Voronezh Brewery, which could be bought at shareholder demand according to the law on joint stock companies, is 2,272 rubles for one share with par value of 0.125 rubles, the Voronezh Brewery said. However, Voronezh Brewery minority shareholders filed two lawsuits with the Arbitration Court of the Voronezh Region to stop the Yarpivo merger.

The minority shareholders voted against approving a merger with Yarpivo at an extraordinary meeting on June 14, said Mikhail Mun, a trader for Energocapital, in St. Petersburg and a minority shareholder in the Voronezh Brewery. Yarpivo, the main shareholder in Voronezh and Yarpivo, did not have the right to vote because it had an interest in the transaction, he said.

The large shareholders and minority shareholders were not able to achieve a constructive dialogue, Mun said. The shareholders did not like the valuation and conditions of converting shares in the Voronezh Brewery to the Yarpivo Brewery, Mun said. "We think that the price of shares in the Voronezh Brewery is undervalued by 50%-58.3%, since, according to our information, the valuation was conducted with invalid information on production volume and sales," he said.

Cypriot-based Emit Trading Ltd., which a minority shareholder in the Voronezh Brewery, also asked the Arbitration Court of the Voronezh Region to ban the merger of the Voronezh Brewery and the Yarpivo Brewery. Baltic Beverage Holding (BBH), the biggest shareholder in both Yarpivo and the Voronezh Brewery, said that the merger is in the interests of shareholders.

This merger is targeted at setting up a larger and more effective company on the core of the two breweries, a BBH press release cites BBH President Christian Ramm-Schmidt as saying. In merging the Russian assets, BBH was governed by Russian legislation and the interests of the companies' shareholders, the release says. The co-efficient for converting the shares was set after an independent evaluation was conducted in line with Russian legislation, the release says.

The minority shareholders’ approval was not necessary for the legal approval of the merger between Yarpivo and the Voronezh Brewery in accordance with the federal law on joint stock companies, since Yarpivo is the main shareholder in the Voronezh Brewery with more than 75%, the release says.

The results of the vote by minority shareholders will not have legal consequences and would not hinder the transfer of Voronezh Brewery assets to Yarpivo.

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