Heineken to buy Russian brewer

Heineken to buy Russian brewer

MOSCOW – Heineken will buy Russian brewer Ivan Taranov in a deal valued at US$560 million (N$3,6 billion), the Kommersant business daily said yesterday, marking a further expansion into one of the world’s fastest growing beer markets.

No comment was immediately available from Heineken. Heineken officials declined to comment to Kommersant, but the newspaper, quoting sources at both companies, said the two firms planned to sign a deal later yesterday.Russia is the world’s fifth-biggest beer market after China, the United States, Germany and Brazil, and the top beer makers are racing to expand in the country.Moscow-based Taranov, Russia’s seventh-biggest brewer, has three breweries spread across Russia and nationwide beer distribution.It made earnings before interest, tax, depreciation and amortisation (EBITDA) of US$30 million in 2004 and analysts forecast that it will post EBITDA of US$40 million in 2005.With brewing capacity of 4,5 million hectolitres a year, it would cost just under US$100 a hectolitre at the assumed US$400 million price tag.Taranov is the brewer of Pit and Three Bears beers.Its beer brands include Konigsberg and Doctor Diesel, and it also brews licensed brands such as Bavaria, Gossen and Coors, to give it a 4,4 per cent share of the Russian beer market by volume and about 4,5 per cent by value.Taranov is owned 62 per cent by Allied Partners, run by Russian entrepreneurs Eugene Kashper and Alexander Lipshifts, and 38 per cent by US private equity group Texas Pacific.Investment banks Lehman Brothers and Renaissance Capital were brought in to advise the group on its future options, and had concluded that a sale was the best option, market sources have said.Heineken shares were up 0,12 per cent in early morning trading, compared with a 0,3 per cent rise in the DJ Stoxx European food and beverage index.Kommersant said owners of the company appraised its assets at US$560 million, above an estimate of US$400 million to US$440 million by Uralsib analyst Marat Ibragimov.The paper quoted a source at Heineken as saying that the location of the breweries was attractive, giving the Dutch company production resources in regions where it had trouble competing before.Beer volumes in the Russian market have grown 10 per cent a year over the last five years.Kommersant said the deal would help Heineken to catch up with its main foreign rival in Russia, Belgian-based InBev, the world’s biggest brewer.If confirmed, this would be the second-largest transaction in the Russian brewery industry after InBev’s buyout of SUN, said analysts at United Financial Group brokerage.- Nampa-ReutersHeineken officials declined to comment to Kommersant, but the newspaper, quoting sources at both companies, said the two firms planned to sign a deal later yesterday.Russia is the world’s fifth-biggest beer market after China, the United States, Germany and Brazil, and the top beer makers are racing to expand in the country.Moscow-based Taranov, Russia’s seventh-biggest brewer, has three breweries spread across Russia and nationwide beer distribution.It made earnings before interest, tax, depreciation and amortisation (EBITDA) of US$30 million in 2004 and analysts forecast that it will post EBITDA of US$40 million in 2005.With brewing capacity of 4,5 million hectolitres a year, it would cost just under US$100 a hectolitre at the assumed US$400 million price tag.Taranov is the brewer of Pit and Three Bears beers.Its beer brands include Konigsberg and Doctor Diesel, and it also brews licensed brands such as Bavaria, Gossen and Coors, to give it a 4,4 per cent share of the Russian beer market by volume and about 4,5 per cent by value.Taranov is owned 62 per cent by Allied Partners, run by Russian entrepreneurs Eugene Kashper and Alexander Lipshifts, and 38 per cent by US private equity group Texas Pacific.Investment banks Lehman Brothers and Renaissance Capital were brought in to advise the group on its future options, and had concluded that a sale was the best option, market sources have said.Heineken shares were up 0,12 per cent in early morning trading, compared with a 0,3 per cent rise in the DJ Stoxx European food and beverage index.Kommersant said owners of the company appraised its assets at US$560 million, above an estimate of US$400 million to US$440 million by Uralsib analyst Marat Ibragimov.The paper quoted a source at Heineken as saying that the location of the breweries was attractive, giving the Dutch company production resources in regions where it had trouble competing before.Beer volumes in the Russian market have grown 10 per cent a year over the last five years.Kommersant said the deal would help Heineken to catch up with its main foreign rival in Russia, Belgian-based InBev, the world’s biggest brewer.If confirmed, this would be the second-largest transaction in the Russian brewery industry after InBev’s buyout of SUN, said analysts at United Financial Group brokerage.- Nampa-Reuters

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