Russia seizes control of Danone and Carlsberg operations

July 18, 2023

The Kremlin has taken control of the in-country subsidiaries of yogurt maker Danone and beer company Carlsberg, reports the BBC.

The units have been put in “temporary management” of the state, under a new order signed by Russian President Vladimir Putin. Moscow introduced rules earlier this year allowing it to seize the assets of firms from “unfriendly” countries. This came after many companies halted business in Russia following its invasion of Ukraine.

Danone and Carlsberg were in the process of selling their Russian operations.

Sunday’s order places the shares of Danone Russia and the Carlsberg-owned Baltika Breweries under the control of Russian property agency Rosimushchestvo.

France-based Danone, which started the process to sell its Russian business last October, said it was “currently investigating the situation”.

The firm added that it was “preparing to take all necessary measures to protect its rights as shareholder of Danone Russia, and the continuity of the operations of the business”.

Carlsberg said it had not received “any official information from the Russian authorities regarding the presidential decree of the consequences for Baltika Breweries”.

The Danish brewer also said it had completed an “extensive process” to separate the Russian unit from the rest of the company. Last month, the company signed an agreement to sell Baltika Breweries but had not yet completed the deal.

“Following the presidential decree, the prospects for this sales process are now highly uncertain,” it added.

In April, Putin signed an order allowing Russia to take temporary control of foreign assets, in response to actions by the United States and other countries that Russia said were “unfriendly and contrary to international law”.

Also in April, it was announced that the Russian units of two energy companies – Germany’s Uniper and Fortum of Finland, had been brought under state control.

Danone’s Russia operation is the country’s largest dairy company, with around 8,000 employees. It was estimated that the sale of the business would result in a €1bn (US$1.1bn; £860m) hit for Danone.

Meanwhile, Carlsberg subsidiary Baltika produces some of the most recognizable beer brands in Russia, with 8,400 employees across eight plants, according to Carlsberg’s website.

Research contact: @BBC