Heineken acquires Shikhan and Volga breweries in Russia
Heineken N.V. announced today that it has signed an agreement to acquire 100% of the Russian group Central European Brewing Company (CEBCO). CEBCO owns 95% of the common voting shares and 78% of the total issued shares of Shikhan Brewery in Sterlitamak and 100% of Volga Brewery in Nizhny Novgorod.
The consideration is payable in cash and will be funded from available resources. The transaction has been completed but is subject to the formal registration of the new charter reflecting the transfer of ownership. The registration is expected within one week. The acquisitions are value enhancing on a NPV (Net Present Value) basis.
As a result of this transaction, Heineken will become the third largest player in the Russian beer market with volumes of 5.9 million hectolitres and a market share of more than 7%. Russia is the world’s fifth largest beer market and Heineken expects the Russian beer market to grow by 7% to over 80 million hectolitres in 2004.
Jean François van Boxmeer, member of the Executive Board of Heineken N.V. commented: “These acquisitions extend our presence and participation in one of the world’s largest and rapidly growing beer markets. The Shikhan and the Volga Breweries offer us a better geographical spread of production facilities in the fastest growing regions in Russia. I firmly believe that by applying our proven capabilities in integration, distribution and brand marketing we will drive significant growth and value from both these businesses and the Russian market in the coming years”.
The acquisition of the Shikhan and the Volga Breweries fit perfectly in Heineken’s growth strategy for Russia. Since Heineken Brewery LLC in St. Petersburg is performing well with growing sales volumes of 15-20% per year, it is expected that the brewery will run out of its capacity in 2005. The Shikhan and the Volga Breweries offer Heineken immediate additional production capacity for producing the national brands Bochkarev and Ohota, currently produced by Heineken Brewery LLC. In addition, the production capacities of the two new breweries will be further increased to meet future sales growth. Furthermore, the acquired regional brands complement Heineken’s existing international and national brands in Russia
The Shikhan Brewery is based in SterlitamakRepublic of Bashkortostan, in the Southeast of the Volga region. The brewery has a production capacity of 1.4 million hectolitres and a market share in the Bashkortostan republic of 24%. The brewery produces 3 brands: Shikhan, Sedoy Ural and Solyanaya Pristan. In 2003 Shikhan Brewery sold a volume of 1 million hectolitres of beer and 0.4 million hectolitres of soft drinks and mineral water.
The Volga Brewery is based in Nizhny Novgorod, in the Northwest of the Volga region. The brewery has a production capacity of 0.8 million hectolitres and a market share in the Nizhny Novgorod region of 40%. The brewery produces 3 brands: Okskoye, Volga and Rusich. In 2003 Volga Brewery sold a volume of 0.7 million hectolitres.
Heineken N.V. is the most international brewer in the world. The Heineken brand is sold in more than 170 countries and the company owns over 115 breweries in more than 65 countries. With a total volume of 109 million hectolitres Heineken ranks second in the world beer market in profitability. Heineken strives for an excellent sustainable financial performance through marketing a portfolio of strong local and international brands with the emphasis on the Heineken brand, through a carefully selected combination of broad and segment leadership positions and through a continuous focus on cost control. In 2003 net turnover amounted to EUR 9.3 billion and net profit to EUR 798 million. Heineken employs over 60,000 people.