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Carlsberg is preparing for legal battle with its Russian conglomerate Baltika over the subsidiary’s sale of rights to its international brands, as Danish brewer Carlsberg enters the next phase of its tortuous exit from the country.
On Tuesday, Carlsberg said it had chosen to write down the entire value of its Russian operations after rejecting a deal to sell the subsidiary to new directors. The new directors were appointed after Moscow occupied the Baltic Sea in July.
The brewer also said it had terminated a licensing agreement to sell international Carlsberg brands such as Tuborg and Kronenbourg in the country, a blow to Baltika’s new management. Carlsberg’s international brands account for approximately 40% of Baltika’s value.
According to documents in a Russian court database, Bartika filed an application with the St. Petersburg Arbitration Court last month asking it to prohibit Carlsberg from bringing legal proceedings against the company in Danish courts “to terminate the license agreement.” The court has scheduled a hearing in February 2024.
On the same day, September 14, Baltika also asked the court to prohibit the Russian Patent Office Rospatent from making any changes to its trademarks involving Tuborg, Kronenbourg, Seth & Riley’s Garage, Holsten and LAV.
A Carlsberg spokesman said: “We are aware of the case in Russia but have not yet received any formal notification from the Russian court.” They added: “We will of course assess the information as it is received.”
Baltika declined to comment.
Along with French food giant Danone, Carlsberg-owned Baltika was seized by state authorities in July and placed under “temporary administration”. Taimuraz Bolloev, the former director of Baltika and a close friend of Vladimir Putin, returned to take over the management of the brewery.
Carlsberg said on Tuesday it had decided to write down the business due to “unacceptable terms” of the deal, which it believed would “justify the illegal acquisition of our business in Russia”.
Western companies trying to sell operations in Russia must jump through multiple regulatory hurdles and agree to strict terms with little hope of gaining much value from the potential deal.
Carlsberg was about to complete the sale of Arnest, a leading Russian manufacturer of metal packaging and aerosols, when it was seized.
One person familiar with the matter said the seizure “shows the unpredictability of this country – politics takes precedence over the law”. The person added that it was “no coincidence” that Carlsberg and Danone were confiscated shortly after warlord Yevgeny Prigozhin’s failed rebellion in late June. “Friends are paid. And sends a strong message: no matter how chaotic things seem, don’t try to leave Russia. Then you will lose everything.”
In August, Carlsberg rival Heineken agreed to sell it to Arnest for a loss of 300 million euros. To ensure the deal is approved, the company said it has agreed to provide three-year licenses to “some smaller regional brands”.
Heineken CEO Dolf van den Brink said at the time: “While it has taken much longer than we expected, this deal safeguards the livelihoods of our employees and allows us to exit the country in a responsible way. “
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