Carlsberg terminates licensing agreements in Russia

Presidential decree sparks Carlsberg to end licensing agreements and operations | The brewing giant sees ‘no path to a negotiated solution for exiting Russia’.

Carlsberg has terminated its licence agreements with  Baltika Breweries, the company's Russia subsidiary, in a bid to prevent it from producing, marketing and selling Carlsberg products.

This comes as a response to the  presidential decree, issued July 16, 2023, temporarily transferring management of Baltika to the Russian Federal Agency for State Property Management.

The brewing giant released a  statement saying: “We will fully impair the value of our business in Russia. Impairment will be recognised in other comprehensive income in the full year accounts, not impacting the income statement.”

In March 2022 Carlsberg, the parent company of Baltika Breweries, announced its intention to end its entire business operations in Russia.

Following the presidential decree the company began a process of separating the Russian business from the Carlsberg Group.

On June 23, 2023 an agreement to sell the Russian business was signed. However, the completion of this sale was contingent on receiving regulatory approvals and satisfying specific conditions in multiple jurisdictions.

The presidential decree created uncertainty over the prospects of this sales process.

With its licence agreements now terminated, Carlsberg has granted a limited run-off period, extending until April 1, 2024, during which Baltika can utilise existing stock and materials.

The statement outlined: “We have now concluded that we currently see no path to a negotiated solution for exiting Russia. We refuse to be forced into a deal on unacceptable terms, justifying the illegitimate takeover of our business in Russia.”

“We are continuing to take all possible actions, including legal, to protect our employees, assets and operations.

“It is unclear what formally will be the next steps in relation to Baltika. As Carlsberg Group, we retain title to the shares in the company while the temporary management is transferred to the Russian state. What the Russian state chooses to do under these circumstances is not clear,” continued the statement.

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