The Polish Maspex Group buys the famous Żubrówka brand from the Russian group for almost a billion dollars

On Wednesday (3 November), it was announced that the Maspex Wadowice Group had reached an agreement to purchase CEDC, a Polish subsidiary of the Russian ROUST group. The value of the transaction was PLN 3.89 billion ($980.79 million).

However, analysts suggest the deal could trigger claims and could even be open to reversal.

The Maspex Group, based in Wadowice, is a leader on the non-alcoholic beverages market in Poland, the Czech Republic and Slovakia, and a leading producer of these beverages in Hungary, Romania, Bulgaria and Ukraine. It is also the largest producer of fast food in Central and Eastern Europe and the leader of the pasta market in Poland.

Founded by Russian businessman Rustam Tariko, ROUST (Russian Standard vodka) is the second largest vodka producer in the world. In 2013, it acquired CEDC (Central European Distribution Corp.). CEDC is the leader of the vodka market on the Polish market with over 47% market share and the largest importer of foreign vodkas in Poland. It has an iconic and historical portfolio of leading vodka brands such as Żubrówka, Soplica, Absolent and Bols. Production takes place at production plants in Oborniki and Białystok. In 2020, the company generated sales revenues of PLN 5.7bn. About 10% of sales are exported to foreign markets, and the company's products are sold to almost 100 countries around the world.

As a result of the planned transaction, Maspex will become the leader of the vodka market in Poland. Thanks to the transaction, Maspex will also become the largest Polish food group with a turnover exceeding PLN 11 billion and employment of over 9,200 people. The transaction will be carried out after obtaining the consent of the Office of Competition and Consumer Protection.

However, market analysts suggest that the trade may not be risk-free and may even be open to a reversal. Tariko owns 28.1% of ROUSTA shares through its bank, Russian Standard Bank (RSB). Both Mr. Tariko and RSB were at the center of a long and high-profile dispute with holders of defaulted bonds issued in 2015 by an affiliate of RSB with a face value of $451m. The amount currently outstanding exceeds $850m. Bondholders have recently had a big victory in the Court of Cassation in Russia and are now expected to pledge their shares and gain control of 49% of RSB shares in the coming months, which is expected to lead to increased scrutiny of RSB's financial practices under Tariko's leadership.

The sale of CEDC will have a significant impact on the bank's valuation. Given the deteriorating asset base of RSB and the escalation of Tariko's conflict with the bondholders, it is important that the proceeds from the sale of CEDC are finally used to keep the bank in existence. Otherwise, RSB may risk bankruptcy, in which case past transactions may be reversed by RSB's bankruptcy administrator. In that case, the Maspex transaction could also be among the related transactions. The state-owned corporate deposit insurance agency, which acts as the insolvency practitioner of Russian banks, is known for vigorously pursuing claims against those controlling Russian banks and reversing pre-default transactions, including scattered and undervalued transactions.

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