French sportswear retailer Decathlon has sold its Russian assets to ARM, a company that already owns a franchise of the fashion retailer Mango, according to Russian Deputy Minister of Industry and Trade Viktor Evtukhov. The sale was approved by the government commission for control over foreign investments, Evtukhov announced on Friday. Russian law stipulates that all transactions for the sale of companies registered in countries that have supported sanctions against Russia must be approved by a special subcommittee of the country’s Finance Ministry. The sale of foreign assets is approved only if it is carried out at a discount of at least 50% to the value determined by an independent valuation.
ARM paid up to 5 billion rubles ($55 million) for Decathlon’s assets in Russia, according to the business daily Vedomosti. Under the terms of the sale, the buyer will reopen 35 stores and reinstate 1,400 jobs. ARM is a clothes retailer that also owns a franchise of Spanish clothing design and manufacturing company Mango.
Decathlon, one of the largest sportswear retailers in the world, suspended the delivery of goods to the Russian market and shut down all of its outlets in the country in March 2022 after the EU imposed Ukraine-related sanctions on Moscow. Decathlon’s parent company, French retail giant Association Familiale Mulliez, opted to keep supermarket chain Auchan running in Russia despite sanctions and criticism in the West.
The Mulliez family also owns home improvement chain Leroy Merlin and fashion retailer Kiabi. It was reported in March that Leroy Merlin was transferring its business in Russia to local management. Kiabi decided to leave Russia in 2021 due to the unprofitability of the business.
The sale of Decathlon’s Russian assets to ARM marks a significant development in the retail sector. Decathlon’s decision to exit the Russian market in 2022 was seen as a consequence of the EU’s sanctions on Russia. However, it appears that ARM saw an opportunity in acquiring Decathlon’s assets and expanding its presence in the market.
The approval of the sale by the government commission for control over foreign investments reflects Russia’s strict regulations on such transactions. In order to mitigate the impact of foreign sanctions, the country requires a discount of at least 50% on the value of the assets being sold.
The purchase of Decathlon’s assets by ARM includes the reopening of 35 stores, which will provide job opportunities for 1,400 individuals. This move not only benefits ARM as the buyer but also contributes to the Russian economy by creating employment opportunities.
Decathlon’s parent company, Association Familiale Mulliez, has made different decisions regarding its various retail chains in Russia. While Decathlon exited the market, Auchan, a supermarket chain, has continued its operations despite criticism. Leroy Merlin, a home improvement chain, has decided to transfer its business to local management, indicating a shift in strategy. Kiabi, a fashion retailer also owned by the Mulliez family, exited the Russian market last year due to financial reasons.
This sale highlights the evolving landscape of the retail industry in Russia, influenced by political and economic factors. As different companies make strategic decisions based on the changing business climate, there is a reshuffling of players in the market.
In conclusion, the sale of Decathlon’s Russian assets to ARM presents a significant development in the retail sector. The approval of the sale by the government commission reflects Russia’s strict regulations on foreign investments. This transaction not only benefits ARM but also contributes to the Russian economy by creating job opportunities. It also demonstrates the varying strategies of retail companies in response to political and economic changes.
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