Thanks to rock-bottom prices, mergers and acquisitions (M&A) are booming in Eastern Europe as a new class of emerging-market multinationals emerges.
Deals are going in both directions: multinationals are taking advantage of the pause in Russia’s boom to grab cheap assets as part of their long-term strategic plans to expand in what was already (briefly in 2008) Europe’s largest consumer market. At the same time, Russian companies are taking advantage of the economic malaise in the developed world to continue their diversification away from the domestic market and begin building up true Russian multinationals.
Coca-Cola, the world’s largest soft drinks maker, grabbed the headlines at the start of September by completing the purchase of one of Russia’s biggest juice producers, Nidan Soki, as part of its plans to expand in this fast-growing market. Coke bought a 75pc stake in Nidan from London-based investment firm Lion Capital, as well as the remaining 25pc held by Nidan’s founders. The juice maker has facilities in Novosibirsk and the Moscow region town of Kotelniki.
The acquisition will bolster the US firm in its perennial fight against archrival PepsiCo, which bought the Russian mineral water producer Lebedansky in March 2008. With more than 50 years of history on the local market, Pepsi is seen as a Russian drink by Russians. Pepsi opened its first factory following an agreement between Richard Nixon and Nikita Khrushchev during the US president’s visit to Moscow in 1959. “Acquiring Russian brands is a way to compete,” says Ilya Plakhinas, head of the marketing division at Soldis Communications.
The Nidan deal reflects Coca-Cola’s confidence in Russia’s potential and its commitment to invest more in the future, Ahmet Bozer, president of Coca-Cola’s Eurasia and Africa Group, told The Moscow Times .
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