07 April, 2006

Russia: Breweries' shareholders will consider a merger with Baltika in April and May

Shareholders in Russia's Pikra, Yarpivo and Vena breweries will consider a merger with the country's top beer maker Baltika in April and May, a Baltika official said on April 6. Baltika is owned by Baltic Beverage Holding (BBH), which is co-owned by Carlsberg and Scottish & Newcastle, according to Reuters .

BBH holds majority stakes in all three of the Russian breweries but wants to consolidate them to produce annualised synergies of $60-80 million within the first year, primarily by cutting the cost of distributing beer across the world's largest country.

"There will be a proposal to shareholders of Pikra, Vena and Yarpivo to discuss the Baltika merger at annual shareholders' meetings," the Baltika official told Reuters. Yarpivo's AGM will take place on April 20, Pikra's on April 27, and Vena's on May 11.

"Pikra, Vena and Yarpivo minorities have the right to sell their shares to Baltika before April 27," the official said. "The buyout process started on March 28."

The fast-growing Russian beer market is a key source of growth for both Carlsberg and Scottish & Newcastle, which are otherwise largely dependent on sluggish west European markets.

BBH owns 92.6 percent of Vena, which operates in St Petersburg and in the Urals and has an overall annual capacity of 5.5 million hectolitres. BBH owns 87.2 percent of Yarpivo, situated in Central Russia and with a capacity of 6 million hectolitres. BBH owns 70.3 percent of Pikra, which operates in Russia's Far East and has a capacity of 1.5 million hectolitres.

Baltika ordinary shareholders can either sell their shares back to the company or retain their shareholding in the enlarged company. The official said that once the buyback was over, the process of converting remaining Vena, Pikra and Yarpivo shares would start and continue throughout the summer.

Yarpivo shareholders will give away four shares for one Baltika share, Pikra shareholders 0.13 shares and Vena holders 0.34.

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