UK paper and packaging company Mondi has finalized its withdrawal from Russia with the sale of its Syktyvkar pulp and paper mill. The company has reached an agreement with Moscow-based real estate developer Sezar Group to sell the plant for 80 billion rubles ($825.7 million). The Syktyvkar factory produces uncoated fine paper and containerboard for the Russian market and employs around 4,500 people.
Mondi’s decision to sell its last remaining facility in Russia comes after the company sold its three packaging conversion plants in the country to Gotek Group earlier this year for $16.5 million. This move marks Mondi’s complete exit from the Russian market.
The sale of the Syktyvkar plant has received approval from Russia’s anti-monopoly agency and the government commission responsible for foreign investments. The transaction is expected to be completed by December.
Mondi first announced its intention to sell the Syktyvkar plant in August of last year. The company initially planned to sell it to Augment, an investment firm owned by Russian billionaire Viktor Kharitonin, for approximately $980 million. However, the deal was scrapped due to a lack of progress in obtaining approval from the Russian authorities.
Mondi, a global packaging and paper supplier, employs over 22,000 people in more than 30 countries. In 2022, the company reported revenues of $9.5 billion.
The decision to exit the Russian market is not unique to Mondi. Many Western companies have chosen to withdraw from Russia due to the sanctions imposed on Moscow following its military operation in Ukraine. To prevent further divestments, the Russian government introduced rules requiring Western companies to obtain official approval for the sale of their local assets from a designated government commission. This commission also has the authority to make corrections to deal prices.
The sale of the Syktyvkar plant represents Mondi’s strategic realignment of its operations. By divesting from Russia, the company can focus on its remaining global operations and adapt to the changing economic and political landscape. Mondi’s decision reflects the challenges faced by Western companies operating in Russia and highlights the impact of geopolitical events on business strategies.
As Mondi completes its withdrawal from the Russian market, it joins a growing list of Western companies that have exited due to political and economic uncertainties. The future of business relations between Russia and Western companies remains uncertain, but the repercussions of these decisions are felt by both sides.