RUSSIA – Consumer goods giant Unilever has received approval from the Russian government to sell its assets in the country, according to a report by RBC business daily.
The deal, approved in late August by a subcommittee of the Russian government commission, places the value of Unilever’s Russian assets between 35 and 40 billion roubles (US$393-US$449 million).
Unilever’s first-half report, published in July, revealed the company’s Russian operations held net assets of around 600 million euros (US$663 million) as of June 30, 2023.
These assets include four factories that have been operational despite the company scaling back some of its activities following Russia’s invasion of Ukraine in February 2022.
The Kommersant daily later reported that Arnest Group, a Russian conglomerate, is likely to be the buyer. Arnest previously acquired Heineken’s Russian assets for a symbolic one euro as part of Heineken’s exit from the country.
Similar deals have been driven by the Kremlin’s demand for a minimum 50 percent discount on the sale of assets by companies from so-called “unfriendly” nations, referring to those that have imposed sanctions on Russia since the Ukraine conflict began.
Unilever has faced public and political criticism for maintaining its presence in Russia, although it has significantly curtailed its operations in the region.
The company has ceased capital flows to and from Russia, halted imports and exports of products, and localised its operations.
CEO Hein Schumacher, in July, stated that Unilever’s main goal was to minimize contributions to the Russian state, while maintaining some business functions to protect its employees.
Nevertheless, Unilever’s continued operations have landed it on Ukraine’s list of “sponsors of war,” compiled by the National Security and Defense Council.
The company’s Russian profits reportedly doubled from 2021 to 2022, according to Ukraine’s National Agency for the Prevention of Corruption.
In response to growing public pressure, Unilever announced in March that it would separate its ice cream division from the rest of its business.
However, it was reported in May that Unilever would continue producing ice cream in Russia after the demerger.
In July last year, it was reported Reginaldo Ecclissato, Unilever’s chief business operations and supply chain officer, had told campaign group the B4Ukraine Coalition the company did “not think it is right to abandon our people in Russia”.
On the possibility of selling the business, Ecclissato reportedly said it had not yet been able to find a solution “which avoids the Russian state potentially gaining further benefit and which safeguards our people”.
He added since the war started Unilever had “put strict constraints around our business, including ceasing all capital flows into and out of the country and stopping imports and exports of our products”.
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