The global leader in the beer market Anheuser-Busch InBev (AB InBev) and Turkish Anadolu Efes have agreed to merge their businesses in Russia and Ukraine. In the joint venture, which will be called AB InBev-Efes, each party receives an equal share and an equal number of seats on the Board of Directors. The merged company will take about 25% of the Russian beer market — the second place after Carlsberg and almost double the gap from Heineken.
In August AB InBev and Anadolu Efes announced signing of the letter of intent to combine the businesses in Russia and Ukraine. The resulting company will be called AB InBev-Efes. It is expected that this transaction will take place by merging the assets of companies, no cash transactions will be held. Closing the transaction is expected no later than the first half of 2018 following approval of Russian and Ukrainian regulators.
Mr. Shpakov (InBev Russia president) said that the Board of Directors of AB InBev-Efes will have equal number of seats. It will be headed by Tuncay Ozilhan — Chairman of the Board of Directors of Anadolu Group and Anadolu Efes. Strategic and operational management will be handled by Dmitry Shpakov as President of the combined company, and CEO of Efes Rus Roy Cornish will become the chief financial officer.
AB InBev owns five factories in different cities of Russia. In the company’s portfolio the following brands are included: Bud, Stella Artois, “Klinskoe”, “Sibirskaya Korona”, etc. According to “SPARK-Interfax”, in 2016 the revenue of JSC “Sun InBev” $41.66 billion rubles, and net loss of 1.88 billion rubles.
Efes in Russia has six plants and a number of brands among which are Velkopopovicky Kozel, Efes, Stary Melnik, “Golden barrel”, etc. the Turnover of JSC “Brewery “Moscow-Efes”” for the year 2016 amounted to 38,55 billion rubles, net profit was 1.99 billion RUB.
The companies’ decision to merge business in Russia and Ukraine is related to fact that AB InBev closed the acquisition of SABMiller in 2016. As a result, AB InBev, already as the world’s largest beer producer has increased its share in the global market to more than 30%. By the time of purchase of SABMiller – SABMiller already had 24% stake in Anadolu Efes. This share in the Turkish company SABMiller received in 2012 in exchange for their business in Russia. According to Mr. Shpakov discussed were different variations on how AB InBev will gain maximum benefit from shares in Anadolu Efes to increase economic efficiency for both companies.
According to Rosstat, overall in Russia 780,6 mln deciliters of beer were sold in 2016. According to Nielsen, at the end of last year the market leader was a Danish concern Carlsberg with a share of 34%. AB InBev and Efes was 13% and 14%, respectively. Fourth place was with the Dutch Heineken — 12%. Thus, by combining business in Russia, AB InBev and Efes will be able to break away from Heineken, occupying approximately a quarter of the market. Also, according to Dmitry Shpakov, after completing the transaction, “the combined company will strive to become number one in the Russian market and will strengthen its leadership positions in Ukraine.”
After completing the transaction, the combined AB InBev-Efes will consolidate the financial results of its operating activities on the markets of Russia and Ukraine. AB InBev will cease to include in its global reporting financial results information on the markets of Russia and Ukraine, but will reflect in the reporting the return of investment in joint venture in accordance with their shares. InBev will replace the company’s results of operations in Russia and Ukraine with the global reports on the income from the combined group.