Danone is to sell its Russian assets, now known as H&N, to a Russian businessman in a deal that sums RUB 17.7 billion (approx. $188 million), according to the Financial Times (FT).
The report states that Danone is looking to sell its Russian business to Vamin Tatarstan, a Russian dairy company owned by businessman Mintimer Mingazov. The news comes seven months after Russian President Vladimir Putin ordered the seizure of the French company’s local operations.
In a letter sent to Russia’s Minister of Agriculture Dmitry Patrushev – and seen by FT – Ayrat Mukhamadeev, the director of a newly created company owned by Vamin Tatarstan, said it had agreed to pay RUB 17.7 billion to take control of Danone’s Russia business.
The letter stated that RUB 7.7 billion (approx. $81.8 million) would go towards paying off debt in the Russia operation, with the remainder funding Danone’s equity in the company.
The deal – which is subject to the approval of Russia’s Ministry of Agriculture before being voted on by a special government subcommittee in charge of approving exits by Western companies – remains uncertain. To date, various Western companies have had their applications rejected, or seen their deals fall apart because of disagreement within the Russian Government.
According to reports, Danone has agreed to provide support until the end of July 2025 as it continues to localise production of certain ingredients to preserve “the high quality of products to which Russian consumers are accustomed”.
The FT has reported that Danone has taken a loss of more than €700 million on its Russia operations since its seizure, as well as an additional depreciation of €500 million last July due to the fall in the value of the Russian rouble. Mukhamadeev’s letter said the price represented a 56% discount to market value – Moscow demands discounts of at least 50% for foreign asset sales.
While other Western companies pulled out of Russia after its full-scale invasion of Ukraine two years ago, Danone initially said it planned to stay in the country, though it changed its stance in October 2022 when it said it would seek a buyer in a transaction that could result in a write-down of up to €1 billion.
News of the proposed sale comes after Putin issued a decree putting Danone’s and Carlsberg’s Russian businesses under “temporary external management” in July last year.
Danone declined to comment when approached by FoodBev.
By Phoebe Fraser
Source: foodbev.com
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