Putin seized assets of Nestlé, French firms and Russia to support Western Ukraine: How big is Nestlé’s business there? | Today’s news
In the latest move against Western companies, Russian authorities have seized the businesses and assets of Swiss food giant Nestlé and three French groups. The Kremlin proposed such measures as retaliation against Western sanctions and what it says are hostile actions by countries supporting Ukraine.
A decree signed by Russian President Vladimir Putin transferred the Russian operations of Nestlé, French retailer Auchan, the former Leroy Merlin DIY chain – now known as Lemana Pro – and French logistics company FM Logistic to a firm called LEV Management.
How big is Nestlé’s business in Russia?
Nestlé has six factories in Russia and employs around 7,000 people, a company spokesperson said, according to an AFP report. Its Russian operations primarily manufacture and distribute products across categories including coffee, pet care, infant formula and confectionery.
However, Russia represents a relatively small share of Nestlé’s global business. According to a news report, Swiss investment bank Vontobel analyst Jean-Philippe Bertschy said Russia now accounts for just over 1% of Nestlé Group’s sales, compared to around 2% before the war in Ukraine.
Nestlé has significantly reduced its presence in the country since Russia invaded Ukraine. The company has suspended most sales, non-essential imports, advertising and capital investment, while continuing to supply essential food products.
Nestlé said it is assessing the latest developments and their options.
“The company is assessing the situation and its options,” Nestlé said, adding that it was determined to take steps to protect its rights and ensure the continuity of business operations, especially for employees.
Nestlé could face a $1.2 billion hit
Although Russia contributes only a small part of Nestlé’s total sales, analysts quoted by AFP said the seizure could still result in a significant financial loss.
Brokerage Jefferies estimated that writing off Nestlé’s Russian business, including funds the company was unable to repatriate, could cost the Swiss group around 1 billion Swiss francs ($1.2 billion).
Nestlé shares fell 2.3% on the Zurich stock exchange after news of the seizure.
What happened to Auchan and Leroy Merlin?
The Russian operations of Auchan and Lemana Pro, formerly Leroy Merlin, were also brought under Putin’s decree. Both businesses are controlled by the French Mulliez family, which also owns sports retailer Decathlon.
Auchan is one of Russia’s largest retailers of food and consumer goods. Its Russian branch has 241 stores, including 62 hypermarkets, and more than 33,000 employees, according to its website.
Auchan Retail Russia said it had asked Russian authorities for an explanation about the presidential decree.
“Once we receive the relevant information, we will be able to provide more detailed comments,” the company said.
Why is Russia taking over Western companies?
The latest asset transfers are part of a broader pattern that emerged after Russia’s invasion of Ukraine in February 2022.
Many Western companies have either sold their Russian operations or sharply curtailed their activities following the imposition of sanctions. Others remained in the country, citing their responsibilities to employees or the need to continue supplying essential products.
Russia subsequently imposed restrictions that made it difficult for foreign companies to leave. Deals involving large foreign businesses typically require presidential approval, while authorities have also taken direct control of some assets.
Previous seizure of Western assets
Russia has previously taken control of the Russian operations of several major Western companies.
In 2023, Moscow took control of the Russian company Danone, which was subsequently sold to a businessman connected to the family of Chechen leader Ramzan Kadyrov. Russian authorities also took control of Carlsberg’s Russian assets that year.
