Danish brewing major Carlsberg announced that it will sell its Russian business on December 3, after on December 2 a presidential decree by Russian President Vladimir Putin released the Baltika Breweries from “temporary management” of the state property agency RosImushestvo.

As covered by bne IntelliNews, In July 2023 Russia in effect nationalised two major players in the brewery and dairy markets, French Danone and Danish Carlsberg. In response Carlsberg has cut all ties with its Russian business and has refused to enter a deal with the Russian government that would make its seizure of the assets look legitimate.

However, amid yet another round of tightening regulation for foreign companies' exit deals, the brewer appears to have given in to the pressure and agreed to sell its business in Russia.

“The transaction is expected to close within the next couple of days. The Carlsberg Group will receive a cash consideration as well as Baltika Breweries’ shareholdings in Carlsberg Azerbaijan and Carlsberg Kazakhstan,” Carlsberg said in the press-release without providing specific details of the deal.

Reuters and Bloomberg reported citing unnamed sources close to the Kremlin that Russia approved the sale for RUB34bn ($321mn). Carlsberg had eight breweries and about 8,400 employees in Russia, and took a $1.41bn write-down on its Russian business Baltika in 2022.

Russian authorities approved the deal because the buyers and sellers agreed on the terms, Kremlin spokesman Dmitry Peskov said, without elaborating, as cited by Bloomberg.

The deal will take the form of a management buyout, with the new controlling shareholders reportedly being “two long-standing Baltika employees” currently holding leading positions in the company, Carlsberg said, without specifying.

Vedomosti daily claimed that one of the investors is the state-appointed manager Taimuraz Bolloyev, who was the director of Baltika from the early 1990s until 2004.

As detailed by bne IntelliNews, both Carlsberg and Danone's operations in Russia were unabashedly handed to Vladimir Putin's cronies. Baltika, the local subsidiary of Danish Carlsberg, was helmed by its former president, Taimuraz Bolloyev, a good friend and business partner of Putin’s “stoligarch” allies Yuri Kovalchuk and Arkady Rotenberg.

Bolloyev is the actual founder of Baltika, who became director of the new Leningrad brewery in 1991 and ran it until 2004. Under Bolloyev, already in 1993 the brewery had been privatised by foreign investors, and Vladimir Putin, back then the deputy mayor of St. Petersburg, supervised the deal. 

After leaving Baltika, Bolloyev founded the clothing company BTK Group, which in 2021 became the sole supplier of clothing for the Russian army. From 2009 to 2011 Bolloyev headed the state-owned company Olympstroy, which was created to build facilities for the Sochi Olympics, according to The Bell.

The Bell also reminds that Bolloyev is a long-time acquaintance of Putin and people in his inner circle. Together with Putin and Rotenberg, he is a member of the management of the Yavara-Neva judo club in St Petersburg, where Putin's childhood coach Anatoly Rakhlin worked. Bolloyev also has a joint business with Yuri Kovalchuk – he owns a 10% stake in Gelendzhik Airport, with another 40% held by Kovalchuk's sanctioned Rossiya Bank.

The Kovalchuk brothers had previously signalled their interest in Baltika, according to two people familiar with the matter cited by the Financial Times last year. “It’s a new redistribution of wealth” to Putin’s circle, said an unnamed Russian oligarch who has known the president for decades.

“Since the announcement of our intention to leave Russia in 2022, we have exhausted all options to find a way to achieve a full exit from Russia while protecting our employees, our assets and the value of the Carlsberg business. With today’s announcement, we will settle numerous lawsuits and IP rights issues related to Baltika Breweries. Considering the circumstances, we believe it is the best achievable outcome for our employees, shareholders and the continued business,” Jacob Aarup-Andersen, CEO of Carlsberg Group, commented in the press release.

The statement stands in stark contrast with the CEO's resisting the nationalisation in November 2023. "There is no way around the fact that they have stolen our business in Russia, and we are not going to help them make that look legitimate," Jacob Aarup-Andersen was quoted as saying by Reuters one year ago.

The company previously tried to pressure Russian officials by threatening to appeal the breach of obligations under a bilateral investment agreement, which previously was also enacted by the ex-shareholders of Yukos oil majors.

Carlsberg also seized international brands (Tuborg, Kronenbourg 1664, Zatecky Gus), which cut off the brewer’s Russian division from any export markets. In response, the law enforcement  detained former Baltika president and vice-president Denis Sherstennikov and Anton Rogachevsky on charges of illegally ceding Baltika's brand portfolio to the Carlsberg Group. 

One of the largest buyers of foreign assets in Russia, Alexei Sagal's Arnest Group, was reportdely not allowed by the Kremlin to pursue a deal with Carlsberg, after he succeeded in picking up assets of Heineken in Russia.