Russia seizes shares of Danone, Carlsberg Subsidiaries
The Russian government has taken control of shares belonging to French agribusiness giant Danone and Danish brewer Carlsberg, as revealed in a decree published on Sunday. The decree, signed by President Vladimir Putin, states that the Russian state will assume temporary management of the shares owned by Danone Russia and Baltika, a subsidiary of Carlsberg.
The actions of the Russian government have prompted concerns in the international business community, leading to a flurry of responses from the affected companies. Danone has acknowledged the situation and assured stakeholders that it is actively investigating the matter. The company stated its determination to take all necessary measures to protect its rights as a shareholder of Danone Russia and ensure business continuity for the benefit of its employees and other stakeholders.
Baltika, a prominent brewing company in Russia, holds a considerable market share of approximately 30 percent. The latest developments have raised uncertainties about the fate of Carlsberg’s operations in the region. In March of this year, Carlsberg had announced plans to divest its entire business in Russia, which employed 8,400 individuals. Last month, the multinational brewer disclosed that it had found a potential buyer for the business after more than a year of searching, primarily due to the conflict in Ukraine. However, with the recent presidential decree, the future of the sales process has become highly uncertain, leaving Carlsberg in a state of apprehension. The company has not received any official communication from Russian authorities regarding the decree or its implications for Baltika Breweries.
Danone, being one of the few multinational companies that chose to remain in Russia despite the Ukraine offensive, had previously revealed its intentions to withdraw from a significant portion of its operations in the country. In October of last year, the company announced its plan to relinquish its dairy and plant-based businesses in Russia, while retaining only the infant nutrition segment. This strategic move was projected to result in a write-off of up to one billion euros ($1.1 billion).
The seizure of shares belonging to Danone and Carlsberg marks another blow to the Russian business landscape, as a multitude of major Western companies have withdrawn from the country since the commencement of the Ukraine offensive on February 24, 2022. The events have sent shockwaves through international markets, raising concerns about the stability of business environments and the implications for future investments in Russia. As the situation unfolds, both Danone and Carlsberg are closely monitoring developments and preparing to navigate the complex challenges ahead.