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Russia. Baltika Announces Proposed Merger with Pikra, Vena and Yarpivo    

ST. PETERSBURG, RUSSIA: Baltika Breweries, the number one brewer in Russia and Eastern Europe, today announced details of a proposed Merger with brewers Pikra, Vena and Yarpivo. If approved, the merger will add major beer brands like Nevskoye, Yarpivo and Tuborg to existing top brands, including Baltika and Arsenalnoye.

“The combination of these four companies will strengthen Baltika as the leading brewer and the largest fast moving consumer goods company in Russia, as well as a proud symbol of Russian business success across the globe,” said Anton Artemiev, Baltika Breweries president. “With the merger, Baltika will become even stronger in the face of international competition in an increasingly consolidating market, and will realize efficiencies across the four companies, while expanding its geographic reach,” Artemiev added.

The proposed merger should complete by late 2006. In the first stage, subject to Baltika shareholder approval, shareholders in Pikra, Vena and Yarpivo will have the option to either exchange their shares into Baltika ordinary shares or sell them for cash at an equivalent value to Baltika. In parallel, Baltika shareholders will have the option of either realizing their investment or retaining their shares.

In the second stage, Pikra, Vena and Yarpivo will be merged into Baltika. This stage will be conditional upon Pikra, Vena and Yarpivo shareholder approvals and regulatory consents. Baltic Beverages Holding majority owner of Baltika, Pikra, Vena and Yarpivo, has confirmed its commitment to the Russian beer market by reiterating that it will take shares in the enlarged Baltika in exchange for its shares in each of Pikra, Vena and Yarpivo rather than cash.

Deloitte & Touche CIS, a licensed appraiser under Russian law, was appointed to prepare an independent valuation of each of Baltika, Pikra, Vena and Yarpivo and determine the fair market value of all four companies.

In determining the share exchange ratios, cash offer prices and redemption prices for stage one the Baltika Board has considered, among other factors, the independent valuations prepared by Deloitte. The Board of Directors of each of Pikra, Vena and Yarpivo have endorsed the independent valuations and the Proposed Merger.

Citigroup Global Markets Limited provided an opinion to the Board of Directors of Baltika as to the fairness to Baltika, from a financial point of view, of the share exchange ratios and cash offers.

Accordingly, the Baltika Board unanimously recommends that shareholders of Baltika actively vote in favor of the proposed merger.

Both independent directors of Baltika, Alexander Izosimov, Chief Executive Officer of VimpelCom and Alexander Ikonnikov, Chairman of the Supervisory Board of the Association of Independent Directors, are fully supportive of the Proposed Merger.

The Baltika Board of Directors has adopted a resolution calling for an Extraordinary General Shareholder Meeting of Baltika to consider and vote on the proposed merger and other related matters. The EGSM will be held by postal ballot; the completed and signed voting ballots must be received by Baltika before 7 March 2006. 

Beverage World19.01.2006