Carlsberg demands compensation for losses for the failure of the deal to sell Baltika

Danish Carlsberg demands compensation from the Russian authorities for damages due to the failure of the deal to sell the Baltika brewing company, reports Interfax with reference to sources. If negotiations do not take place, the investor can apply to an international arbitration court.

The Danish concern announced the decision to sell Baltika at the end of June this year. The name of the buyer was not specified, as were the parameters of the transaction. According to Interfax, Arnest Group might be interested in buying the company. The probable transaction amount is 71 billion rubles.

However, in July of this year, Russian President Vladimir Putin signed a decree according to which 98.56% of Baltika’s shares were transferred to the temporary management of the Federal Property Management Agency. Carlsberg did not agree with this decision and the sale transaction did not take place.

The Ministry of Finance of the Russian Federation reported that Baltika “is not owned by the state”; the Federal Property Management Agency has been appointed as a temporary manager who exercises the powers of the owner with the exception of the powers to dispose of property. Since the presidential decree is based on current Russian legislation, there are no grounds for compensation for losses, Interfax reports the position of the Ministry of Finance.

In early October, Carlsberg announced the termination of licensing agreements with Baltika for the production and sale of all group products, including international and local brands. Baltika had to sell its reserves before April 1, 2024, but it is challenging this decision in the Arbitration Court of St. Petersburg and the Leningrad Region. A preliminary hearing will take place on November 15.

According to the agency, in mid-October, Carlsberg sent to the Russian authorities, including the Ministry of Finance and the Ministry of Economic Development, notifications of a dispute under three international agreements at once (Russian treaties on the promotion and mutual protection of investments with Denmark and Sweden from 1993 and 1995, respectively, and another Soviet agreement with Germany – from 1989), as well as proposals for negotiations. If negotiations do not bring results within six months, the investor can refer the dispute to an international arbitration court.

Baltika is the second largest brewing company in the Russian Federation and operates eight factories. The company’s revenue in 2022 amounted to 100.7 billion rubles, net profit 9.95 billion rubles.

On April 25, Putin signed a decree that allows the introduction of temporary management of foreign assets in Russia. This regime is activated in the event of deprivation of Russia, Russian legal entities or individuals of the right of ownership of property on the territory of foreign states, as well as in the event of a threat to the national, economic, energy and other security of the country.