
SECTION 5.3
ACQUISITIONS
AND DISPOSALS
ACQUISITION OF ENTITIES
Acquisitions after the reporting date 2022
On 15 December 2022, it was announced that
the Group had entered into an agreement to
acquire Waterloo Brewing Ltd., Canada, for a
cash consideration of approximately CAD 144m
(DKK 742m). The transaction is expected to
close in the first half of 2023, subject to
approval by Waterloo Brewing’s shareholders
and the satisfaction or waiver of other
customary closing conditions.
2021
In January 2021, Carlsberg acquired 100% of
the German Wernesgrüner Brewery for a cash
consideration of DKK 511m. The purchase price
allocation of the fair value of identified assets,
liabilities and contingent liabilities was
completed in 2021, resulting in recognition of
goodwill of DKK 267m.
DECONSOLIDATION OF ENTITIES
The local shareholder owning 10% of the
shares in Gorkha Brewery, Nepal, is a related
party to the Group’s 33% partner in CSAPL. In
addition to the ongoing disputes with our
partner in CSAPL regarding India and Nepal,
there is also a dispute with the local 10%
shareholder in Gorkha Brewery. Contrary to its
legal and contractual rights, the Group’s
influence on the business operations in Nepal
has been restricted since 2021 through actions
that hamper its right of decision-making and
insight into the business. The Group therefore
decided to cease full consolidation of the
Nepalese business with effect from the end of
2021. We contested the actions in Nepal
through the local courts. A Nepalese High Court
judgment was expected in 2022 but has been
postponed and is now expected in H1 2023. A
favourable ruling would not immediately lead
to reconsolidation of the Nepalese business,
which would require demonstration of the
consistent ability to exercise our rights as the
majority shareholder. Until the rights as
majority shareholder are de facto re-
established, the Group continues not to
consolidate the Nepalese business. The inability
to exercise the rights of the majority
shareholder in the Nepalese business has a
negative impact on the value of the business.
This should, in the opinion of the Group, be
reflected in the valuations of the put and call
options, cf. section 5.4.
CASH FLOW
Cash flow to acquire or dispose of
shareholdings in associates and when gaining
control of subsidiaries is included in financial
investments, while the cash flow on acquisition
of an additional shareholding in a subsidiary,
i.e. acquiring non-controlling interests, is
presented in financing activities. In 2022, the
Group made a capital injection of DKK 48m in
an associate.
ACCOUNTING ESTIMATES
AND JUDGEMENTS
Assessment of control
The classification of entities where Carlsberg controls
less than 100% of the voting rights is based on an
assessment of the contractual and operational
relationship between the parties. This includes
assessing the conditions in shareholder agreements,
contracts etc. Consideration is also given to the extent
to which each party can govern the financial and
operating policies of the entity, how the operation of
the entity is designed, and which party possesses the
relevant knowledge and competences to operate the
entity.
Elements of cash consideration paid
and received
DKK million 2022 2021
Consideration paid for
acquisition of entities - -214
Consideration received for
disposal of entities - 21
Cash and cash equivalents
acquired/disposed of - -428
Acquisition and disposal of
entities, net - -621
Consideration paid for
acquisition of associates - -48
Consideration paid for increase
of investment in associates -48 -
Acquisition and disposal of
associates, net -48 -48
Cash flow from acquisition of
shareholdings, total -48 -669
Another factor relevant to this assessment is the
extent to which each of the parties can direct the
activities and affect the returns, for example by
means of rights, reserved matters or casting votes.
Purchase price allocation procedures
For acquisitions of entities, the assets, liabilities and
contingent liabilities of the acquiree are recognised
using the acquisition method. The most significant
assets acquired generally comprise goodwill, brands,
property, plant and equipment, receivables and
inventories.
No active market exists for the majority of the
acquired assets and liabilities, in particular in respect
of acquired intangible assets. Accordingly,
management makes estimates of the fair value of
acquired assets, liabilities and contingent liabilities.
Depending on the nature of the item, the determined
fair value of an item may be associated with
uncertainty and possibly adjusted subsequently.
The unallocated purchase price (positive amount) is
recognised in the statement of financial position as
goodwill and allocated to the Group’s cash-generating
units.
Brands
The value of the brands acquired and their expected
useful life are assessed based on the individual
brand’s market position, expected long-term
developments in the relevant markets and
profitability.
The estimated value includes all future cash flows
associated with the brand, including the related value
of customer relations etc.
Management determines the useful life based on the
brand’s relative local, regional and global market
strength, market share, and the current and planned
marketing efforts that are helping to maintain and
increase its value. When the value of a well-
established brand is expected to be maintained for an
indefinite period in the relevant markets, and these
markets are expected to be profitable for a long
period, the useful life of the brand is determined to be
indefinite.
Brands are measured using the relief from royalty
method, under which the expected future cash flows
are based on key assumptions about expected useful
life, royalty rate, growth rate and the theoretical tax
effect. A post-tax discount rate is used that reflects
the risk-free interest rate with the addition of a risk
premium associated with the particular brand. The
model and assumptions applied are consistent with
those used in impairment testing, and are described in
further detail in section 2.2.3.
Customer agreements and portfolios
The value of acquired customer agreements and
customer portfolios is assessed based on the local
market and trading conditions. For most entities, there
is a close relationship between brands and sales.
Consumer demand for beer and other beverages
drives sales, and therefore the value of a brand is
closely linked to consumer demand, while there is no
separate value attached to customers (shops, bars
etc.), as their choice of products is driven by consumer
demand. The relationship between brands and
customers is carefully considered so that brands and
CARLSBERG GROUP ANNUAL REPORT 2022 CONSOLIDATED FINANCIAL STATEMENTS 111