Russia has taken control of shares belonging to the Russian subsidiaries of French yogurt maker Danone and Danish brewer Carlsberg, according to a decree announced on Sunday.
In a decree signed by Russian President Vladimir Putin on Sunday, July 16, 2023, foreign interests in Danone’s Russian operations and Carlsberg’s shares in local brewery Baltika are placed under “temporary management” of Russia’s federal property agency.
The Carlsberg Group last year announced plans to exit the Russian market within weeks of Russia launching a full-scale military invasion of Ukraine. At that time, the company had 8,400 employees. Last month, the multinational brewer announced it had found a buyer for the company, subject to regulatory approval, but did not name it.
Danone was one of the few multinationals to remain in Russia since the offensive began. The company announced in October that it would exit most of its operations in the country and take write off of up to €1 billion ($980 million).
The latest action may raise pressure on Western companies, who are already under criticism for continuing in Russia. In the months following Putin’s full-scale invasion of Ukraine last year, more than 1,000 companies left Russia.
However, a handful of companies, including Heineken, Nestlé, Unilever, and Mondelez, have maintained a presence in the country for various reasons. Companies who are still considering leaving Russia may now feel a renewed sense of urgency.
Meanwhile, Carlsberg stated that it had received no official information regarding the seizure of its Baltika business from Russian authorities. Carlsberg said in a statement, “The group will assess the legal and operational implications of this development and take all necessary actions in response.”
Carlsberg had chosen to exit its business in Russia and had already found an unnamed buyer and penned a deal for its sale on June 23. “Following the presidential decree, the prospects for this sales process are now highly uncertain,” the company said.
Carlsberg said in a statement that the development was “unexpected” and that the prospects for the sale of Baltika Breweries were now “highly uncertain.” The Danish company had agreed a deal late last month to sell the business, subject to regulatory approvals.
According to Carlsberg’s website, Baltika is one of Russia’s largest consumer goods companies and employs 8,400 people.
Danone is also in the process of selling its Russian business. It said previously that the deal could result in a €1 billion ($1.1 billion) hit to the asset’s value. The company said in a statement Sunday that it was “investigating the situation” and did not expect it to impact its earlier guidance on this year’s earnings.
A spokesperson for Danone said the French dairy giant was currently exploring the situation and “is preparing to take all necessary measures to protect its rights as a shareholder of Danone Russia and the continuity of the operations of the business in the interest of all stakeholders, in particular, its employees.”
“Danone is preparing to take all necessary measures to protect its rights as a shareholder of Danone Russia and the continuity of the operations of the business in the interest of all stakeholders, in particular its employees,” it added.
