Title: Russia Takes Control of Danone and Carlsberg Subsidiaries Amid Rising Tensions
Date: 17 July 2023
In a move that further escalates tensions between Russia and the international community, the Russian government has taken control of the Russian subsidiaries of major multinational companies Danone and Carlsberg. The units have been placed under “temporary management” of the state, following an order signed by Russian President Vladimir Putin.
This comes as Moscow introduced rules earlier this year, allowing it to seize assets of firms from countries deemed “unfriendly.” Many companies had already halted their business operations in Russia in response to its invasion of Ukraine.
Danone and Carlsberg were in the process of selling their Russian operations when Sunday’s order was issued. As a result, the shares of Danone Russia and Carlsberg-owned Baltika Breweries have been placed under the control of Russian property agency Rosimushchestvo.
France-based Danone, which had initiated the process of selling its Russian business last October, expressed concern over the situation and stated that it is currently investigating the implications. The company also emphasized its commitment to taking all necessary measures to protect its rights as a shareholder of Danone Russia and ensure the continuity of its business operations.
Similarly, the Danish brewer Carlsberg announced that it had completed an extensive process to separate its Russian unit from the rest of the company. However, it had not yet finalized the sale of Baltika Breweries when the order was issued. Carlsberg acknowledged the uncertainty surrounding the sales process due to the presidential decree.
The Russian government’s decision to seize control of foreign assets dates back to April when President Putin signed an order allowing the temporary control of such assets. This move was a response to actions by the United States and other countries deemed as “unfriendly and contrary to international law.” In April, it was announced that the Russian units of two energy companies, Uniper from Germany and Fortum from Finland, had also been brought under state control.
Danone’s presence in Russia is significant, as its Russian operation is the largest dairy company in the country, employing approximately 8,000 people. The sale of the business was estimated to result in a €1 billion ($1.1 billion; £860 million) loss for Danone.
Meanwhile, Carlsberg subsidiary Baltika Breweries is renowned for producing some of Russia’s most popular beer brands and operates eight plants, employing 8,400 individuals, according to Carlsberg’s website.
As tensions continue to rise between Russia and the international community, the control of these subsidiaries represents another significant development in the ongoing geopolitical landscape. The implications for Danone and Carlsberg, as well as the broader business community, remain uncertain as they navigate through this rapidly evolving situation.