“Baltika” and the Russian “daughter” of Danone are transferred to the temporary management of the state

The Federal Property Management Agency will receive temporary management of the shares of the Russian subsidiary of the Danone holding and the Baltika brewing company. The corresponding decree was signed by Vladimir Putin on July 16. The document itself is published on the portal of legal acts. It follows from it that securities in Baltika owned by structures of the Danish holding Carlsberg Group, as well as shares of JSC Danone Russia, owned by Produits Laitiers Frais Est Europe and Danone Trade, are transferred under state control. A request to the Federal Property Management Agency remained unanswered. A representative of the Russian office of Danone declined to comment. Baltika redirected Vedomosti’s questions to Carlsberg. They did not respond to a request.

Lawyers interviewed by Vedomosti say that this measure cannot be called a “direct nationalization” of the assets of foreign companies, but it can significantly affect their ability to manage business in Russia and, in particular, lead to the disruption of deals with existing potential buyers. Yury Fedyukin, managing partner of the law firm Enterprise Legal Solutions, notes that technically the shareholders remain the owners of the shares and property of their Russian firms, but the external manager receives all the levers for making decisions that affect the conduct of business in them.

“To put it simply, the manager behaves as if he were a shareholder / owner, including participation in the general meeting of shareholders and voting, but he does not have the right to sell, transfer, donate or otherwise dispose of the property transferred to him and shares in the authorized capital” , he explains.

Baltika produces beer under the brands Zhigulevskoye, Tuborg, Zatecky Gus, Kronenbourg 1664, S&R’s Garage and others. At the end of 2022, the company’s revenue increased by 21.96% to 101 billion rubles, net profit for this period amounted to 10 billion rubles, according to SPARK-Interfax. In March 2022, the owner of Baltika, Carlsberg Group, announced its intention to leave the Russian market. In June of this year, she signed an agreement to sell the Russian business, the buyer was not disclosed.

Danone, which produces dairy products in Russia under the brands Prostokvashino, Rastishka, Tyoma, etc., transferred its Russian business to local top managers in October last year. Prior to this, the holding suspended all investments in the country. The company also announced plans to sell its assets, but specific negotiations with anyone were not reported. In 2022, the revenue of the Russian “daughter” Danone increased by 9.14% to 93 billion rubles, the company’s net profit for the year amounted to 5.5 billion rubles.

“Baltika” and “Danone Russia” are not the first companies with foreign owners, which were transferred to the temporary management of the state. In April of this year, the Russian president introduced similar measures against energy companies. And if the assets of the latter were of critical importance for a number of regions of Russia in terms of energy generation, then this cannot be said about Baltika and Danone Russia, Fedyukin notes. According to him, all this means that the risks of applying the procedure for transferring shares and property of foreign holdings to the temporary administration of Russia arise for a wide range of companies.

This is a clear signal to foreign companies that now have to choose between staying in Russia or losing their property here, even if only temporarily, says Artem Motorny, managing partner at Walnut Capital.

Theoretically, the inclusion of Baltika and Danone Russia in the list of companies whose shares are transferred to the temporary management of the Federal Property Management Agency can be challenged, Fedyukin notes.

But the judicial practice formed to date contains only one case when a positive decision was made in favor of the plaintiff – and this was back in the 1990s. Dmitry Prosvirin, the managing partner of the Central District law firm, also agrees with him, who recalls that not a single interested person was able to challenge such a decision.-