Guess Makes Unconventional Move: Reacquires Stake in Russian Market Amid Sanctions
Date
5/29/2023 4:30:26 AM
(MENAFN) Guess, the American fashion brand, has made a noteworthy move in the Russian market by reacquiring its stake from its Russian partner, Vyacheslav Shikulov. This deal, described as unusual in the fashion industry within a sanctioned country, has garnered attention. According to reports from Kommersant, Guess purchased the 30 percent share from Shikulov for euro8 million (USD8.5 million), effectively consolidating its Russian business by owning 100 percent of the operations. The transaction received approval from the United States Treasury Department, highlighting the regulatory aspect of the deal.
The origins of this agreement can be traced back to the end of 2015 when Guess and Shikulov signed a 'put option' agreement. This agreement granted Shikulov the right to sell his 30% stake in the local business, while simultaneously obliging Guess to repurchase his share by December 31, 2025. In November 2022, Shikulov exercised his option, prompting Guess to seek permission from the Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury to conduct the buyback.
Industry experts have noted that this move by the American clothing giant deviates from the prevailing trend in the current market environment. Typically, Western companies exiting Russia tend to sell their assets to local investors. The decision by Guess to repurchase its stake could indicate concerns on the retailer's part regarding the continuation of its operations in Russia. The complex geopolitical landscape and ongoing sanctions may have played a role in the company's strategic considerations.
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