Baltika Board approves guiding principles for a proposed merger of the Pikra, Vena and Yarpivo

09/09/05 Baltika Breweries addressed a letter to its shareholders and the general public regarding its proposed merger of Baltika with the Pikra, Vena and Yarpivo brewing companies. The attached letter was placed on Baltika’s website and will be posted to Baltika’s shareholders.

The Baltika Board of Directors has approved the guiding principles for a proposed merger of the Pikra, Vena and Yarpivo brewing companies. Baltika’s goal is to develop the company into Russia’s largest and most professional consumer goods business, and this proposed merger is a positive step toward achieving this.

Any such legal merger will be subject to the approval of Baltika minority shareholders. Minority shareholders will receive detailed information on the proposed legal merger prior to any EGSM votes. The board of Baltika also intends to provide information prior to the EGSM on the advantages of the legal merger and an indication of its future dividend policy.

The Independent Directors of Baltika Board have agreed to appoint an independent appraiser of established credentials to conduct a full review in order to determine the value of Pikra, Vena and Yarpivo as well as Baltika in connection with the proposed merger.

It is the intention of the Board of Baltika that Baltika, Pikra, Vena and Yarpivo shareholders will each have the option to take shares in the “enlarged Baltika” OR to take cash. The relevant valuations will be determined by the independent directors of Baltika who are appointing an independent appraiser of established credentials to conduct a full review to determine the value of Pikra, Vena and Yarpivo as well as Baltika in connection with the proposed merger. The Board are also appointing an independent financial adviser to assist them in ensuring that these valuations are properly conducted and fair.

The BBH Board of Directors has stated BBH’s intention to take shares, not cash, in the enlarged Baltika in exchange for its holdings in Pikra, Vena and Yarpivo. This ensures that Baltika’s debt, post merger, will remain low and demonstrates BBH's commitment to the business and to the Russian market.