Russia: Baltika announces details of proposed merger of Russian assets

The Board of Baltika Breweries has on January 18 announced details of its proposed merger with the Pikra, Vena and Yarpivo brewing companies whose majority owner is Baltic Beverage Holding AB (“BBH”). BBH is a 50:50 joint venture between Scottish & Newcastle plc and Carlsberg Breweries A/S.

The Board of Baltika believes that the merger will strengthen the business and enable it to develop into the largest and most professional consumer goods business in Russia.

The key points of the transaction are as follows:

The proposed merger will result in a business with:

an unrivalled brand portfolio

leadership by volume

increased national coverage

strengthened management team

stronger financial profile

improved efficiency and potential synergies

BBH has confirmed its commitment to take shares, not cash, in the enlarged Baltika in exchange for its holdings in Pikra, Vena and Yarpivo. This demonstrates BBH’s commitment to the business and the Russian beer market.

ZAO Deloitte & Touche CIS was appointed to provide independent valuations. Citigroup provided the Board of Baltika with a fairness opinion.

The proposed merger, which is subject to approval by Baltika, Pikra, Vena and Yarpivo shareholders, is expected to complete by December 2006.

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