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13 Mar, 2024 20:09

Putin calls off nationalization of Danone Russia

The shares of the French food company’s local business had previously been placed under temporary state control
Putin calls off nationalization of Danone Russia

Russian President Vladimir Putin has signed a decree to remove French food giant Danone’s local business from a list of assets placed under temporary state management, according to a document published on the portal of legal acts on Wednesday.

The new decree makes changes to a document published in July 2023 according to which the shares of Danone Russia controlled by French parent company Produits Laitiers Frais Est Europe were nationalized. Over 83 million Danone Russia shares were transferred to state control at the time.

These provisions have now been repealed. The reason for the decision has not been reported.

The Financial Times wrote last month that Danone was looking to sell its operations in Russia to local dairy company Vamin Tatarstan. The deal was reportedly subject to the approval of Russia’s Agriculture Ministry before being voted on by a special government subcommittee in charge of approving exits by Western companies. The transaction price represented a 56% discount to the business’s market value, according to the FT report.

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

Despite Western sanctions, Danone originally said in 2022 that it would stay in Russia, defending its decision by citing its responsibility to “the people we feed, the farmers who provide us with milk, and the tens of thousands of people who depend on us.” However, later that year, it announced plans to exit the market amid rising pressure from customers and activists. The company said it expected the exit to cost it $1 billion.

Danone’s Russian business included 13 factories, employed 7,200 people, and generated 5% of the company’s annual global sales of around $27 billion.