Citibank discusses Anadolu Efes shares after Russia placed its JV under local management

Investing.com -- On December 30, 2024, AB InBev Efes B.V.'s Russian operations were transferred to temporary local management, as per a presidential decree. This move comes after Anadolu Efes (IS:AEFES ) made an agreement in October 2024 to purchase AB InBev's 50% stake in the Russian business, a deal still awaiting regulatory approval.

Shares in Anadolu Efes fell sharply, in response to the news. While the stock added 1.6% on Friday, it is down about 25% from its December high.

The Russian government has not provided an official reason for this move. Yet, this is not an isolated incident. The government has previously introduced temporary local administration to foreign companies planning to sell their Russian businesses.

For example, Carlsberg (CSE:CARLb )'s Russian assets were placed under state administration since July 23. The beer manufacturer only regained control of its assets in December 2024 after the state approved a buyer.

Other companies that have experienced similar temporary management include Danone (EPA:DANO )'s Russian business and Pulkovo Airport. The latter has shareholders from Russia and other non-Western countries.

"Overall, at the current share price, we think the market now implies no value to the Russian business, including no access to cash on balance in the country. However, based on the precedents above, the local administration is likely to be removed once the deal is approved by the government," Citi analysts said.

"As AEFES had no plans to exit the country, we would expect AEFES’s stake in the Russian business to be unchanged, thus providing upside risks to the current nil valuation of Russian business."

"On the negative side, however, we believe that recent news likely increase probability that ABInbev’s stake in JV could be sold to a local player (with AEFES retaining its stake), while based on similar precedents the resolution of the deal might take longer than expected (from 8 months to over a year)."

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Source: Investing.com