AB InBev, Efes to merge Russian operations as sales slide

Brewers Anheuser-Busch InBev and Anadolu Efes have agreed to merge their businesses in Russia and Ukraine, following years of decline in the Russian beer market due to tighter regulation.

AB InBev, the world's largest brewer and home to brands including Budweiser and Stella Artois, announced the non-binding deal on Aug. 9 without disclosing financial terms. AB InBev owns 24 percent of Efes, Turkey's biggest brewer, inheriting it from SABMiller, which it acquired last year.

Russians are among the world's biggest drinkers of alcohol, but beer sales, which grew rapidly after 2000 on the back of investment from international players, have tumbled since 2008 when the government began taking steps to curb drinking.

AB InBev has closed five plants there and an executive told Reuters earlier this year that its remaining five ran at between 40 and 90 percent of capacity last year.

The Belgium-based brewer said on Aug. 9 that the 50-50 merger would result in a new company called AB InBev-Efes, which will be fully consolidated in the financial accounts of Efes. AB InBev will treat the business as an equity stake.

Shares of Anadolu Efes were up 2.5 percent in Istanbul at 0732 GMT, while AB InBev shares were down 0.4 percent in Brussels.

AB InBev said in a statement the combination would strengthen the competitive position of both companies' brands in the markets involved, while also creating potential for further growth.

Both brewers will have equal representation on the board of the new company, but Tuncay Özilhan, chairman of Anadolu Group and Anadolu Efes, will be its chairman.

The deal is expected to close in the first half of 2018.