Courtbound Baltika shareholder sells stake back to S&N

Hartwall Capital has sold its controversial stake in Russian brewer Baltika back to BBH, Scottish & Newcastle/Carlsberg's joint venture in the region.

Hartwall owned four per cent of Baltika, one of BBH's key brewing assets, and is also a S&N stakeholder.

It faces a legal challenge from another minority shareholder, Electromir, which objected to Hartwall's right to use its shares to vote in favour of BBH's plans to consolidate its Russian operations, a vote which BBH lost.

Hartwall will defend its historic voting record in a Russian court tomorrow (Thursday), but to avoid future legal action has sold its shares back to BBH.

Hartwall said it was "entirely confident" of its legal position, but it had wanted to avoid a "protracted, spurious and unproductive" court case.

"Hartwall Group was trying to make an investment in an exciting market but didn't want to get involved in a lengthy court action," said an S&N spokeswoman.

S&N had taken legal advice in Russia before allowing Hartwall to take a stake in BBH and had not influenced the group to approve its consolidation proposals, she noted.

BBH could "only speculate" as to the benefit Electromir thinks it can extract from such [legal] proceedings", she added.

"You have to question the motives of a shareholder who holds 50 shares and is prepared to hire very expensive lawyers to pursue a case like this through the courts," the spokeswoman concluded.

BBH still needs the approval of a majority of the minority shareholders to pursue its cost-saving plans for the Russian business.

While it would prefer what it calls a "legal completion", S&N believes it can implement many of its proposals without such stringent shareholder approval.