(MENAFN) French dairy giant Danone is reportedly in talks to sell its Russian operations to local agri-group Vamin Tatarstan, following Moscow's temporary nationalization of Danone Russia shares in July 2023. The move, prompted by a presidential decree, transferred over 83 million Danone Russia shares to state control. According to sources and documents reviewed by the Financial Times, Vamin Tatarstan, through its newly created company, has agreed to acquire Danone's Russian business for 17.7 billion rubles (USD191.5 million).
The letter sent to Russian Agriculture Minister Dmitry Patrushev outlines the deal, indicating that Danone will receive USD108.4 million for its equity, while USD83 million will be allocated to service the Russian unit's debt. The proposed transaction is contingent on the approval of Russia's Ministry of Agriculture and must undergo a vote by a special government subcommittee responsible for endorsing exits by Western companies.
The reported sale comes at a 56 percent discount to the business's market value, according to an independent appraisal cited in the letter. Ayrat Mukhamadeev, the director of the acquiring company, emphasized Danone's commitment to supporting the transition until the end of July next year. The rebranded entity, named Life & Nutrition, will focus on localizing production of specific ingredients to maintain the high-quality standards expected by Russian consumers.
This article explores the implications of Danone's potential exit from the Russian market, analyzing the reasons behind the sale amid nationalization and delving into the economic and geopolitical factors influencing the decision. Examining the regulatory hurdles and the broader context of Western companies' exits from the Russian market, the piece aims to provide a comprehensive understanding of the ongoing developments in the dairy industry.
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