It took longer than expected, but Heineken will immediately leave Russia completely. The brewer sold the Russian branch of the company for 1 euro. “The flag is not flying, but we are happy with this deal. We take good care of our people and leave in a responsible manner,” says CEO Dolf van den Brink to our colleagues at ‘het AD’.
As early as April, Heineken said it was in talks with a potential buyer, but the brewer was unable to say anything about it for a long time. Until Thursday in the course of the afternoon a delegation was finally able to sign at the notary in Moscow. As of Friday, the Arnest Group is the new owner of the Russian branch of Heineken; a renowned Russian company that is in packaging materials and cosmetics. All 1,800 employees have been given a three-year job guarantee.
The beer brewer will not get rich from the long-cherished deal. The buyer paid only one euro. However, the successor must repay an amount of 100 million euros for an existing business debt. At the bottom of the line, the sale is expected to cost Heineken around 300 million euros. “And let’s be very clear. Nothing has been earned in the last year either. I don’t believe there is any other company that leaves Russia for 1 euro,” said CEO Dolf van den Brink.
Big dent in image
With the sale, the brewer hopes to show that it keeps its promises and does not want to earn anything from Russia. The image of Heineken has suffered a major blow in the past year and a half. Shortly after the invasion of Ukraine, the company announced its departure from Russia. The Heineken beer soon disappeared from the shelves.
CEO Dolf van den Brink of Heineken. © Getty Images for Heineken®
But in the spring, Heineken was heavily criticized when it emerged that the company had simply invested in Russia. The issue came to light thanks to the independent news website Follow the money. Those journalists saw on Heineken’s Russian site that 61 new products had been launched ‘in record time’. The Dutch head office had given its approval.
Although the brewer initially dismissed the allegations as “untrue,” she eventually apologized. Heineken stated that those Russian investments were necessary to prevent the company from going bankrupt. Heineken said it wanted to protect its 1,800 employees and avoid legal problems, because it is illegal in Russia to deliberately bankrupt a company. The brewer also did not want the company to be nationalized. “All kinds of people have said this was nonsense and we created unnecessary panic, but it was a real risk. Other companies have had to deal with this and we didn’t want that. We spent months, day and night, walking this thin path and making sure we could get this done,” says Van den Brink.
Hard guarantees are hard
With the sale to the Arnest Group, Heineken can finally “leave Russia in a responsible manner,” says Van den Brink. The company absolutely did not want a buyer who is on the black list of Russians or who has to deal with Western sanctions. Van den Brink acknowledges that it is difficult in these turbulent times to get firm guarantees that this company will keep to the agreements made, but Van den Brink believes in it. “They think their reputation is very important. If they don’t, it would hurt them internationally.”
The Arnest Group was an interesting party for Heineken, because it already took over a similar American company last year. As a result, it now has experience in the production of beer and soft drink cans. They are not on any sanctions list and have proven to be able to run factories in the past. They have been making perfumes, cosmetics and spray cans for many years. It was especially exciting whether the authorities would approve the sale.
Mixed feelings
The brewer has mixed feelings about the sale. The company had already been in Russia for twenty years. Van den Brink: “It is sad that the world has come to this with a war that is still going on. It is also sad for the 1,800 colleagues we now have to say goodbye to. And it has been extremely painful for us as a company. A lot of colleagues have been spoken to negatively about this process, while it was difficult to respond and we had to stay focused to get this deal over the finish line. Now we manage to leave Russia. Very few companies have succeeded in doing this so far. But the flag does not go out. There are no winners.”
Now that the signature has been placed, the transfer only needs to be entered in the commercial registers. Heineken is immediately gone from Russia. However, the new owner is allowed to produce and sell Amstel for another six months. She also retains the license for the production and sale of several local brands for three years. Heineken says it will not receive any royalties on this and will not help the successor with anything.
Although the departure costs the brewer hundreds of millions of euros, Heineken says it has a “negligible impact” on earnings per share.
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2023-08-25 07:19:48
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