UK-US cosmetics giant abandoned its plans to sell its Russian business due to imposition of substantial exit tax
Date
12/28/2023 3:08:51 AM
(MENAFN) Avon, the international direct-sales cosmetics brand, has reportedly abandoned its plans to sell its Russian business due to the imposition of a substantial exit tax, as reported by Kommersant on Wednesday. The United States-based multinational had initially announced in March 2022 that it would cease investments in Russia and halt exports from its Russian plant to other markets following the commencement of the Ukraine conflict.
Earlier this year, Avon was said to be in the process of preparing to sell its plant located just outside Moscow, with negotiations reportedly underway with potential buyers, including Russian cosmetics manufacturer Natura Siberica and Arnest Group, which had previously acquired Heineken's Russian assets in August 2023. Avon's proposed plans involved the transfer of rights to use its brand name written in Cyrillic.
However, in November, the company informed potential buyers that it had opted not to proceed with signing binding offers for the sale, according to information from Kommersant. This reversal by Avon is attributed to a regulation by Russia's Foreign Investment Commission, which mandates that departing foreign companies sell their assets at discounts of up to 50 percent.
The move by Avon underscores the challenges posed by regulatory requirements in Russia, particularly in the context of the Western corporate exodus from the country. The Kremlin spokesperson, Dmitry Peskov, recently commented on such departures, noting that companies leaving Russia not only risk losing their market position but also see their assets being acquired by Russian companies at significant discounts. Avon's decision to retain its Russian business adds a new dimension to the evolving landscape of international companies navigating complex geopolitical and regulatory environments.
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