French dairy products maker Danone and Danish beer giant Carlsberg Group have launched inquiries into the nationalization of their assets in Russia. Under a presidential decree published on Sunday, Russia has temporarily nationalized all foreign shares of Danone Russia, controlled by French parent company Produits Laitiers Frais Est Europe, and Baltika Breweries, controlled by Carlsberg Group, handing them over to the Russian Federal Property Management Agency. The decision covered over 99% of shares within Baltika Breweries’ registered capital and more than 83 million Danone Russia shares.
In response to the nationalization, Danone issued a statement saying that it is aware of the decision and is currently investigating the situation. The company also stated that it is ready to take all necessary measures to protect its rights as a shareholder of Danone Russia and ensure the continuity of business operations for the benefit of all stakeholders, particularly its employees.
Carlsberg Group, on the other hand, has not received any official information from the Russian government regarding the presidential decree and its consequences for its holdings in the country. The company expressed surprise at the development and announced that it will assess the legal and operational consequences and take necessary actions in response.
Both Danone and Carlsberg had previously announced plans to divest from Russia. Last year, Danone reportedly selected around 20 potential buyers for its assets and was in negotiations for the sale. Carlsberg Group had reached a deal to sell its business in Russia last month but was awaiting regulatory approvals and fulfillment of certain conditions in multiple jurisdictions to finalize the sale. The presidential decree has now created uncertainty regarding the prospects of these sales processes.
The nationalization of foreign assets in Russia reflects President Putin’s move to exert greater control over industries and protect Russian interests. This action comes amid increasing tensions between Russia and Western countries, with the Russian government seeking to reduce foreign influence and promote domestic ownership. The nationalization of Danone and Carlsberg’s assets highlights the risks faced by foreign companies operating in Russia and may have wider implications for foreign investment in the country.
Danone and Carlsberg’s inquiries into the nationalization indicate their concerns regarding the protection of their rights and the impact on their operations. These inquiries will likely involve legal assessments and consultations to determine the best course of action. The companies will need to navigate the complex legal and regulatory landscape in Russia to safeguard their interests.
As this story unfolds, it will be important to monitor the responses of both Danone and Carlsberg, as well as potential implications for other foreign companies operating in Russia. The outcome of the inquiries and any subsequent actions taken by the companies will shed light on the extent to which foreign investments are affected by Russia’s nationalization efforts.
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