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On Sunday, Moscow enacted a decree signed by President Vladimir Putin, giving control of the Russian subsidiaries of Danone and Carlsberg’s Baltika Breweries to the Russian government.
The decree states that the Russian companies owned by the French food group and the leading Russian beer producer will be put under “temporary administration.”
This action represents the first time Russia has taken ownership of Western businesses’ subsidiaries since acquiring Finland’s Fortum and Germany’s Uniper in April.
No further details were provided by the Kremlin on Sunday, but these moves are seen as responses to Western confiscation of Russian assets.
In April, a decree was passed allowing the state to seize assets from countries deemed unfriendly by the Kremlin in order to protect Russian property and national interests.
Baltika, which is based in St Petersburg, is responsible for producing some of Russia’s most well-known beer brands and employs 8,400 individuals across eight plants as stated on the Carlsberg website.
In March of last year, amidst Russia’s full-scale invasion of Ukraine, Carlsberg announced its intention to divest completely from its business operations in Russia.
Just last month, the company disclosed that it had identified a buyer for Baltika and had requested approval from the regulatory commission established by the Kremlin to handle the exit of Western corporations in order to finalize the transaction.
The company was unable to provide immediate comment on the situation.
Companies from “unfriendly” nations can only sell their Russian assets for up to 50% of their value and are required to make a “voluntary contribution” of 5-10% of the sale price to Russia’s war chest. The government’s approval, along with Putin’s personal permission in the energy and financial sectors, is necessary for such deals to proceed.
Assets seized under the April decree will be overseen by Russia’s federal state asset management agency, unless Putin decides otherwise, as only he has the authority to revoke external control.
Danone’s Russian business is the largest dairy company in the country. The firm had previously announced plans to sell its Russian assets, noting that the transaction could result in a write-off of up to €1bn. However, it had not yet revealed potential buyers.
The company has commented that it is currently investigating the situation and is prepared to take any necessary measures to protect its rights as a shareholder and ensure business continuity.
According to an individual familiar with the matter, the Russian government’s decision came as a complete surprise, as the deal was nearing completion. The person stated, “We wonder whether there is a diplomatic dimension to this, due to France’s support for Ukraine.”
In June, Dmitry Peskov, a spokesperson for Putin, stated that Western investors and companies were welcome in Russia, but added that “naughty companies” that fail to fulfill their obligations would be dismissed. He further added, “And what we do with their assets after that is our business.”
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