Companies Exiting Russia: Western Businesses Selling Their Assets Amidst Sanctions
Introduction:
In recent times, several Western companies have made the decision to sell their Russian assets or hand them over to local managers. These actions are driven by the need to comply with sanctions related to the Ukraine conflict and to address concerns over potential asset seizures by the Kremlin. This corporate exodus from Russia raises questions about whether Russian companies and institutions are capitalizing on the opportunity to acquire valuable assets at discounted prices.
Automotive Sector
1 Continental AG:
The renowned car parts manufacturer, Continental AG, announced on May 22 that it has sold its Russian tire plant to Russian holding company S8 Capital. This move reflects their strategic decision to divest their Russian assets.
2 Renault:
In 2022, the French carmaker Renault sold its majority stake in Avtovaz to the Russian state. Although the sale reportedly amounted to just one rouble, Renault retained a six-year option to repurchase the stake.
3 Volkswagen:
Volkswagen, the German automaker, recently completed the sale of its Kaluga production plant and local subsidiaries to Art-Finance LLC. This transaction was supported by auto dealer group Avilon and marks Volkswagen's strategic shift in the Russian market.
Banking Sector
Societe Generale:
Societe Generale, the French bank, made the decision to sell its Russian business Rosbank in May of the previous year. The buyer was Russia's Interros Capital, and the sale incurred a substantial hit of 3.1 billion euros ($3.38 billion) for Societe Generale.
Energy Sector
1 BASF:
In January, the German chemicals group BASF announced a significant write-down of 7.3 billion euros as its Wintershall Dea energy business disengaged from Russia. BASF holds 67% of the voting rights in Wintershall, while the remainder is controlled by Mikhail Fridman's holding company, Letter One.
2 Shell:
British energy and petrochemical company Shell finalized the sale of its Russian retail and lubricants business to Lukoil in the previous year. Additionally, Russia's government approved the sale of Shell's former stake in the Sakhalin-2 energy project to Novatek for 94.8 billion roubles.
Food & Beverages Sector
1 AB InBev:
AB InBev, the brewer, announced its decision to sell its non-controlling stake in the Russian joint venture AB InBev Efes. This move resulted in a $1.1 billion impairment charge for the company.
2 Carlsberg:
Carlsberg, the Western brewer with significant exposure to Russia, recently signed an agreement to sell its Russian business. However, details regarding the buyer and the agreed price remain undisclosed, pending an extensive regulatory review by Moscow.
Other Sectors
1 Henkel:
Consumer goods company Henkel completed the sale of its Russian business to a consortium of local financial investors for approximately 600 million euros.
2 Imperial Brands:
In April 2022, Imperial Brands, a prominent British tobacco group, handed over its Russian business to investors located within Russia.
3 Maersk:
A deal was struck between Maersk, the renowned shipping and logistics corporation, and IG Finance Development Limited, resulting in the sale of Maersk's two logistics sites in Russia. Additionally, Maersk sold a 30.75% stake in Russian port operator Global Ports Investments to Delo Group, Russia's largest container operator.
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Disclaimer: The information in this blog post is for educational purposes only. Invest responsibly at your own risk. No liability for gains or losses. Seek professional advice before making investment decisions.
