In a decisive move shaped by the pressures of international sanctions and the ongoing war in Ukraine, Danish brewing giant Carlsberg has finalized the sale of its Russian subsidiary, Baltika Breweries, for 2.3 billion Danish kroner (DKK), equivalent to approximately €308 million. The deal, announced in Carlsberg’s 2024 annual report, marks the end of over 25 years of the company’s presence in Russia and brings to a close a tumultuous chapter defined by rapidly shifting market valuations, legal disputes, and geopolitical challenges.
A dramatic shift in valuation
Before the conflict in Ukraine, Baltika was estimated to be worth around 20 billion DKK (approximately €2.68 billion). However, as the war escalated and sanctions tightened, the subsidiary’s value plummeted. By 2023, when Carlsberg began serious negotiations to sell the asset, estimates had already fallen to approximately 7 billion DKK (around €938 million). Ultimately, the management buyout concluded at a fraction of earlier valuations, with two high-ranking Baltika employees acquiring the company for 2.3 billion DKK (€308 million).
This steep decline in value reflects not only the impact of external political pressures but also Carlsberg’s strategic decision to exit the Russian market. The sale effectively signals Carlsberg’s recalibration of its international portfolio amid an increasingly challenging global landscape.
Strategic exit and operational implications
The completion of the sale of Baltika Breweries represents more than a financial transaction—it symbolizes the end of Carlsberg’s 25-year journey in Russia.
Despite the divestment from Russia, Carlsberg will maintain its operations in other parts of the region by retaining its subsidiaries in Kazakhstan and Azerbaijan. This strategic choice underlines the company’s intent to reorient its regional focus while minimizing exposure to the geopolitical risks that have plagued its Russian operations.
The road to Sale: turbulence and legal battles
Carlsberg’s challenges in Russia escalated dramatically in July 2023, when the brewing giant’s attempts to sell Baltika were overshadowed by further complications. Earlier in the year, a prospective sale was derailed by a presidential decree signed by Vladimir Putin, which transferred state control of Baltika, thereby freezing earlier plans and inflicting a reported cumulative loss of 20 billion DKK (approximately €2.68 billion) on Carlsberg.
Adding to the tension, in November 2023, Russian authorities arrested two former senior executives from Baltika Breweries, including ex-CEO Denis Sherstennikov. The arrests were connected to allegations of an attempted internal scheme aimed at transferring export rights—which would have resulted in an estimated loss of approximately 1.2 billion rubles (around 90 million DKK or €12 million)—from Baltika to Carlsberg. In reference to these arrests, Carlsberg had stated:
“We are devastated by the news that two Baltika employees were arrested in Russia yesterday, as well as the additional allegations against several other employees.”
Despite the severity of the accusations, both of the arrested former executives ultimately received only minor fines, as their cooperation throughout the investigation led to a lenient resolution by the courts in Saint Petersburg.
Management buyout and final reflections
The sale of Baltika was structured as a management buyout, enabling the company’s internal leadership to assume control of the brewing operations amid the political and economic maelstrom. Carlsberg’s CEO, Jacob Aarup-Andersen, underscored the significance of the decision in a follow-up comment:
“Under the circumstances, we believe that this is the best possible outcome for our employees, shareholders, and the continued operation of the business.”
This measured response reflects Carlsberg’s balancing act between mitigating losses incurred over the years and safeguarding its long-term strategic interests amid an unpredictable international environment.
