Danone studies legal options after Russia confiscated its local business

The French dairy group danone is reviewing its legal options after the Russian state took control of its subsidiary in the country, a source close to the matter told Reuters on Monday.

The source reported that danone he would write a letter to the Kremlin and was in contact with the French authorities, including the office of President Emmanuel Macron. In the letter he will ask for explanations, but Danone still does not know what is legally feasible, added the source, who did not want to be named because the matter is confidential.

According to a decree signed by President Vladimir Putin on Sunday, foreign-owned stakes in danone russiaalong with those from Carlsberg at a local brewery were placed under the “temporary management” from the government property agency Rosimushchestvo.

The move highlights the vulnerability of other consumer products firms that continue to operate in Russia, some of which have announced plans to leave the country. the soap maker DoveUnilever, and Swiss food giant Nestlé are still in the country, as is British American Tobacco, which is trying to sell its unit.

reckitt It declared last year that it had started a process to transfer ownership of its Russian business, which, if successful, would make it the first major toiletries maker to do so after Russia’s invasion of Ukraine.

Western companies face tough exits from Russia after the government said in December that they must sell their operations for at least half price and pay 10% to the state, Reuters reported.

danone said in October that it would relinquish control of its dairy food business in Russia, which could have meant a repayment of up to 1,000 million euros (US$ 1,120 million). Companies from all over the world had then announced expensive exits from Russia.

The source close to the matter said the French company had been weeks away from reaching an agreement to sell its subsidiary, which has 7,500 employees spread across 13 factories.

He added that Danone, like everyone else, had heard the news when the Russian presidency announced it to the media and had been very surprised, especially since there had been “started a very organized process to leave the country”.

Nestlé, BAT, Reckitt and Procter & Gamble declined to comment on Monday’s news, while Unilever did not respond to a request for comment. In February, the firm said it risked having to stop operating in Russia and of having to assume losses or depreciate their assets in that country.

In December, Kellogg announced that it would sell its Russian business to a local company, Chernogolovka. A spokesperson for kelloggs he told Reuters on Monday that the sale had closed last week.

Source: Reuters