Russia has transferred the assets of Carlsberg and Danone in the country to “temporary management”, de-facto nationalising two major players in the brewery and dairy markets, according to the July 16 decree signed by Vladimir Putin.
The shares of Danone in Danone Russia and the Baltika brewing company owned by Carlsberg Group have now been transferred to the temporary management of the Federal Property Management Agency (Rosimushchestvo).
The decree came in the same week as the government reportedly doubled down on red tape for the exit of foreign companies, by introducing a new 10-item requirement list that should be fulfilled in any such exit deal. The list includes a ban on buy-back options.
As followed by bne IntelliNews, the fallout from Moscow’s invasion of Ukraine triggered an exodus of foreign businesses. But in reality only one in ten of the major Western companies that promised to pull out of Russia after the start of the war have actually left the country.
A special government commission approves any foreign asset sale (at a minimum discount of 50%) and the government is mulling at least two additional “exit taxes” for companies pulling out of Russia and their new local beneficiaries. Most recently, a presidential decree was signed that possibly paved the way for the eventual nationalisation of foreign assets, already applied to Finnish and German energy majors Fortum and Uniper.
In these conditions the EU is reportedly looking for ways to encourage and facilitate exits from Russia, but in the meantime the Russian government keeps on tightening the regulations.
bne IntelliNews has reported extensively how both Danone and Carlsberg have been instrumental in introducing brewing, milk processing and dairy production technology to Russia. Fortum and Unipro too were technology leaders in their respective fields (renewable energy generation), suggesting a pattern to be watching for the next targets of Putin’s “temporary management”.
According to a Kommersant daily source in investment circles, the transfer of the Russian companies Danone and Carlsberg to Rosimushchestvo may also be related to the Russian authorities’ desire to prevent large sums of money from the sale of assets abroad, which could affect the recently weakened ruble exchange rate.
Sources warned the daily that the introduction of state management may now be considered in other structures of large foreign companies selling business in Russia. Another Kommersant source suggested that all foreign exit M&A deals are likely to be put on pause.
“The Carlsberg Group has been operating in accordance with local rules and regulations in Russia and finds this development unexpected. The Group will assess the legal and operational consequences of this development and take all necessary actions in response,” Carlsberg commented, adding that the company “has not received any official information from the Russian Authorities regarding the presidential decree or the consequences for Baltika Breweries”.
Both Danone and Carlsberg have been advancing their previously announced intention to reduce their presence in Russia.
Danone announced the transfer of control over its dairy products and herbal beverages business in October 2022, making a €1bn Russia pullout. The deal could include 13 plants producing traditional dairy products, yoghurts and desserts.
Danone is Russia’s top milk processor, with revenue of RUB122bn for 2021, against the RUB108bn of its nearest competitor, Wimm-Bill-Dann (part of PepsiCo).
Carlsberg Group said at the end of June 2023 that it had completed its search for an investor for Baltika and signed an agreement with the future owner of the assets. Baltika, along with Turkish Anadolu Efes, is the top player in the Russian brewery market and operates eight breweries producing more than 50 brands, including Baltika, Don, Arsenalnoye, Zatecky Gus and others.
Baltika produced 197mn dekalitres of beer and beer drinks in 2022, in second place after AB InBev Efes (223mn), and followed by Heineken Breweries, which brewed 93.65mn dekalitres of beer and beer drinks.
Dutch Heineken, owning United Heineken Breweries, was planning to sell its business in Russia too, but is unlikely to be allowed to do so after Carlsberg asset grab, Kommersant sources believe.
