Brewing Tensions: Carlsberg Cuts Ties With Baltika Amid Russian Takeover

Carlsberg AS CABGY has announced the termination of its license agreements with Baltika Breweries, effectively ending Baltika's authorization to produce, market, and sell all products under the Carlsberg brand in Russia. 

This decisive move comes in response to the Russian government's temporary seizure of Baltika's management, following a presidential decree issued on July 16, 2023.

The termination of the license agreements signifies Carlsberg's staunch refusal to comply with what it views as an illegitimate takeover of its business operations in Russia. 

Baltika is granted a limited run-off period until April 1, 2024, to utilize existing stock and materials. However, Carlsberg has made it clear that it sees no avenue for a negotiated exit from Russia under the current circumstances.

Protecting Interests Amid Uncertainty

Carlsberg is actively exploring all available options, including legal measures, to safeguard its employees, assets, and operations in Russia. The future of Baltika remains uncertain, as the Danish brewer retains ownership of the company's shares, even though its management has been temporarily transferred to the Russian state. 

Financial Implications

In light of these developments, Carlsberg has decided to fully impair the value of its business in Russia. This impairment will be recognized in other comprehensive income in the full-year accounts and will not impact the income statement. 

Price Action: CABGY shares traded higher by 1.95% at $25.82 on the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.