Roust Alcohol Holding Rustam Tariko has agreed to sell the vodka producer Żubrówka to its Polish subsidiary CEDC International Sp. z o.o. (CEDC). The buyer will be the Polish group Maspex, a major food manufacturer. The parties have signed a sale agreement, reported by Roust and Maspex.

Subject of the transaction

CEDC (Central European Distribution Corporation), which is acquired by Maspex - the largest producer and importer of vodka in Poland. The company produces vodka under the brands Absolwent, Żubrówka, Bols, Royal, Soplica, and is also a supplier and distributor in Poland of Jägermeister liqueur, Carlo Rossi wines, Gancia sparkling wines, Remy Martin cognacs, as well as alcohol brands Metaxa, Grants, Campari and Aper’ol.


CEDC accounts for 47% of the sales of this alcohol on the Polish market, Roust said in a statement. CEDC's Polish plants in Oborniki and Bialystok produce over 780 million bottles of vodka per year, and the company also owns three licensed warehouses. Annual sales of CEDC exceed 19 million 9-liter boxes - it accounted for more than half of Roust's sales (total 35 million 9-liter boxes in 2020), about 10% of sales are in overseas markets, and the company's products are sold in almost 100 countries of the world. In 2020, CEDC received sales revenue of 5.7 billion zlotys (about 102.5 billion rubles), according to a message from Maspex.

CEDC was founded in 1990 by American William Kerry and his partners: initially the company, then called Carey Agri, was engaged in the distribution of beer and alcohol in Poland. In 1998, CEDC made an initial public offering on the NASDAQ. In the 2000s, CEDC decided to expand the business and began buying production sites in Europe. In Russia, in 2008, a Polish company acquired the producer of Parliament vodka - the Urozhai company, and then the producer of Zelenaya Marka vodka - the Russian Alcohol company and the distributor of Whitehall elite alcohol. For Russian assets, CEDC paid about $ 1.3 billion by borrowing funds on the open market through the placement of three issues of credit notes.

The company was the leader in the Russian vodka market, but then since 2010 CEDC sales began to fall, and in 2011 it received a net loss of $ 1.3 billion. CEDC was on the verge of bankruptcy, and the owner of Roust (then called the Russian Standard holding ) Rustam Tariko, who bought 9.9% of CEDC shares in December 2011, proposed a rescue plan for the company, according to which bondholders of the company were to receive $ 172 million in cash and another $ 650 million in new CEDC bonds. The CEDC board of directors and most of the lenders supported the plan and was delisted from the exchange. After the plan was approved by the American bankruptcy court, 100% of CEDC went to Roust Inc, a subsidiary of Russian Standard. The acquisition cost Tariko $ 440 million, and the combined company had to pay debts to creditors.

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Since Roust became the sole shareholder of CEDC in 2013, “significant strides have been made to increase the capitalization of CEDC's business,” the Tariko structure said. In 2013, CEDC accounted for 22.7% of the sales volume on the Polish vodka market. It follows from Maspex's message that the offer to buy CEDC came from the product group: Roust "accepted the offer to sell CEDC to a strategic investor." The deal is in line with Roust's strategy, which, as stated in its announcement, intends to focus on further growth in the Russian market and the international expansion of its global brands.

The deal concerns only Polish brands and assets, all Russian assets that CEDC had (including vodka brands Zelenaya Marka, Talka, Zhuravli, Parliament) remain with the Roust group, a company representative told RBC. Under the terms of the deal, Roust will remain the distributor of CEDC alcohol brands in key international markets, and CEDC will continue to sell the Russian Standard and Gancia brands in Poland.

What the seller is known for

Roust Holding is the world's second largest vodka producer (after Britain's Diageo) and a major distributor of premium alcohol in Russia. Now Roust owns vodka brands "Russian Standard", "Green Mark", "Talka", "Parliament", "Zhuravli", "Marusya", "Topaz", "Urozhay", and also distributes well-known international brands - among them Italian Gancia sparkling wine, Remy Martin cognac, Jägermeister liqueur, Glenfiddich and Grant's whiskey.

The holding was founded by businessman Rustam Tariko, who owns the eponymous Russian Standard Bank. In 1992, Tariko created Roust Inc, which was engaged in the import and distribution of premium alcohol. Then Tariko started his own production of vodka: in 1998, the Russian Standard brand was introduced, which was positioned as a premium one.

Shortly after buying CEDC, Roust ran into trouble over inherited bonds. In 2015, the company lost its leadership in the Russian vodka market, and in 2016 the company defaulted because it was unable to redeem three-year bonds issued in March 2013 and scheduled for maturity on May 31, 2016, and did not pay $ 37 million to bondholders. the day before she warned investors that she might ask for debt restructuring. In November 2016, Roust agreed with 90% of holders of two Eurobond issues on capitalization and restructuring of its debt. At the end of 2017, Roust began to regain its position in the Russian vodka market, and in 2018 it again became the leader (at the end of 2018, Roust distilleries produced 10.29 million decalitres of vodka).

The latest available reporting from Roust dates from 2018. According to the restructuring plan described in it, holders of secured bonds received new 6-year bonds for $ 385 million with a 10% coupon, a cash payment of $ 20 million and about 14% of new Class B shares. It was also reported that Roust intends to conduct an IPO - initially it was planned in 2019, but then postponed several times, the next date was scheduled for November 2021.

Roust's revenue for 2018 amounted to $ 2.3 billion, which is 13% more than in 2017 ($ 1.9 billion), net profit increased by 15% - to $ 788 million ($ 683.3 million in 2017). The revenue of Rust Russia JSC in 2020 amounted to RUB 31.6 billion. (15.6% less than in 2019), the net loss increased to 3.8 billion rubles. (up from 919.9 million in 2019).

What the buyer is known for

Maspex is Poland's largest privately owned food processing company and one of the largest in this segment in Central and Eastern Europe, the company said. Maspex was founded in 1990 as a distributor of coffee and cocoa, after 1995 the company has been engaged in the production of juices, nectars and drinks, since 2003 - in the production of pasta, the company is also engaged in the production of canned vegetables and fruit, ketchups and sauces and instant products (cappuccino, cocoa, dry cream for coffee, instant tea). The company produces about 1.8 billion liters of juices, nectars and beverages and calls itself a leader in the juice, nectars and beverages market in Poland, Czech Republic, Slovakia and Romania. More than 30% of the company's total turnover comes from sales abroad. In 2018, Maspex's consolidated sales revenue amounted to PLN 4.76 billion (RUB 85.5 billion), according to its website.

Maspex has been operating in Russia since 2002, in particular, it is engaged in the production of Tedi juices, as well as the sale of Tiger energy drinks.

Transaction amount

The parties estimated the value of the CEDC company at 3.89 billion Polish zlotys (about $ 1 billion or 69.9 billion rubles), Roust said in a statement. The deal must be approved by the Polish Competition and Consumer Protection Authority. The deal is expected to be closed by the end of 2021, a Roust representative told RBC.

Trade value

For Maspex, the alcohol business will become a new direction of activity. As a result of the purchase of CEDC, the largest Polish company in the foodstuffs segment will be created with a turnover of over 11 billion zlotys (about 197.8 billion rubles at the current exchange rate of the Central Bank), Maspex said in a statement. The company is expanding its portfolio with iconic Polish brands, including Żubrówka, the legendary Polish vodka known around the world, and this acquisition will be an excellent result of the 30-year history of Maspex, said co-owner and CEO of the group Krzysztof Pavinski. The alcohol market in Poland in 2020 was estimated at 39 billion zlotys (more than 701 billion rubles), of which 34% were vodka.

The vodka brands that Maspex bought were annually included in the rating of the world's largest alcohol brands from the industry expert Drinks International. At the end of 2020, the Żubrówka brand ranked third in the ranking of millionaire vodka brands with over one million 9-liter boxes sold, and the Soplica brand ranked eighth (their sales amounted to 10 and 4.3 million 9-liter boxes, respectively). For comparison, the most popular vodka of the Roust holding, Russian Standard, ranks 10th in this rating with sales of 3.7 million 9-liter boxes.

Tariko sold "the most valuable alcoholic asset he had," says Stanislav Kaufman, founder of the Kaufman branding agency. CEDC brands are well-known in Europe and popular in Poland, a country where vodka consumption is historically high. According to Kaufman, the reason for the sale could be either that the owner of Roust received such a good offer, which he could not refuse, or the general situation in Tariko's business, connected not only with the alcohol business. After the sale of CEDC, Tariko will have a "powerful alcohol company" in Russia, but Kaufman doubts that a company focused on the domestic market will be able to compensate for the sale of the Polish company.

The Russian Standard brand is difficult to compare with Żubrówka or Soplica, since they are sold in different price categories, says Igor Kosarev, President of the Union of Alcoholic Beverages Producers: the sales volumes of Polish brands may be higher, but the brand capitalization and margin of the premium Russian Standard are higher.