Russian President Putin stops nationalizing French company

Russian President Vladimir Putin has signed a decree removing the Russian branch of French food giant Danone from the list of entities whose assets are temporarily under the control of the Russian state, RT reported, citing a document published in the Official Gazette on March 13.

Specifically, the newly announced decree makes changes to a decree published in July last year, according to which Danone Russia shares held by its French parent company Produits Laitiers Frais Est Europe were nationalized. More than 83 million Danone Russia shares were transferred to state control at that time.

Responding to the decree giving the Russian government the right to buy Western companies at a “significant discount,” a move aimed at making it harder for entities to leave the country, Kremlin spokesman Dmitry Peskov said that after “saying goodbye” to companies that do not fulfill their obligations, “what we do with their assets afterwards is our business.”

Control over Danone Russia has now been lifted. The reason for the Kremlin leader's reversal of the decision to nationalize the French company is unclear.

World - Russian President Putin stops nationalizing French company — The factory of French food group Danone in Chekhov, Russia. Danone is one of the leading groups in the dairy market in Russia. Photo: Moscow Times

The UK’s Financial Times reported last month that Danone was looking to sell its Russian operations to local dairy company Vamin Tatarstan. The deal is said to have to be approved by the Russian Ministry of Agriculture before it can be voted on by a special government subcommittee that approves the exit of Western companies.

The transaction price represents a 56% discount to the company's market value, the British newspaper reported.

Danone has agreed to provide support until the end of July next year as the rebranded unit, now called Life & Nutrition, continues to localize production of certain ingredients to maintain “the high quality of products that Russian consumers are accustomed to.”

Despite Western sanctions, Danone initially said in 2022 that it would stay in Russia, defending its decision not to leave by citing its responsibility to consumers, farmers who supply milk, and tens of thousands of workers who depend on its production facilities.

However, in late 2022, Danone Russia announced plans to withdraw from the ivory market amid mounting pressure from customers and activists. The company said it expected the withdrawal to cost $1 billion.

Danone's Russian operations include 13 factories, employ 7,200 people and generate 5% of the company's annual global revenue of around $27 billion .

Minh Duc (According to RT, Moscow Times)

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