Danone sells Russian subsidiary
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Danone wants to sell its Russian business. Now the assets have been transferred to the temporary management of the Federal Property Management Agency. According to the Financial Times, the French office intends to sell them to the Vamin company from Tatarstan. Its owner is on the board of directors of the transferred subsidiary. According to the publication, the management of Vamin sent a letter to the Ministry of Agriculture. They agree to pay more than 17 billion rubles to gain control over Danone’s Russian business. Over 7 billion rubles. will be used to cover the debt for servicing the structure.
According to the Financial Times, the discount under discussion exceeds 55% of the market value of the business. Will this deal be beneficial for the parties? And won’t the Federal Property Management Agency block it? Sergei Novikov, partner of the GRM legal group, answered these questions to Kommersant FM: “The situation related to the sale of Danone Russia to a Russian investor, in principle, is interesting to both parties. The transaction amount is 17.7 billion rubles, of which allegedly 7.7 billion rubles. should remain in Russia to pay debts and current activities, and 10 billion rubles. Danone must go directly.
De facto, the shares of Danone Russia belong to the French company and are only under the management of the Federal Property Management Agency. We cannot yet accurately compare the assets of the French company and the amount they can receive. But based on the 2022 reporting, the real value of Danone’s business is about 50 billion rubles. Accordingly, if we extrapolate this amount to the redemption amount, we get a discount of about 65%, which, in principle, is plus or minus an acceptable value. Therefore, I think that the price, although a stretch, is acceptable.”
The sale of Danone’s subsidiary must also be approved by the Ministry of Agriculture and the Government Subcommittee. As Kommersant FM’s interlocutors note, the Russian side is most likely also interested in the deal; it will allow us to get rid of talk about the nationalization of assets. Also, the Federal Property Management Agency, the commission and the Ministry of Agriculture will be able to make their own adjustments to the conditions, says Natalia Butrina, head of the legal service of Bonum Capital:
“The conditions may be adjusted, but most likely the Government Commission will approve the deal. The Federal Property Management Agency probably has a little less reason in this regard than the market players who previously tried to negotiate with Danone. These are the groups “Agranta”, “Cherkizovo” and others. After all, we now have a negotiated procedure for conducting such transactions. Therefore, the Government Commission authorized to do so can influence the conditions of the conclusion. Now we’re just waiting for specific conditions, because anything can happen.”
Danone has been working in Russia since the 90s; more details about the company’s assets and their transfer to the Federal Property Management Agency can be found in the Kommersant FM certificate.
Russian structures of Danone unite 17 factories with a staff of over 100 thousand employees. The company owns such brands as Danissimo, Prostokvashino, ActiBio (formerly Activia), Actimuno (formerly Actimel), Rastishka and others.
After the outbreak of hostilities in Ukraine, the French group Danone announced the suspension of investments in the country. Then the company noted that the decision would not affect the production and sale of products, but in October 2022 it announced plans to abandon business in Russia.
The subsidiary was transferred to local top management for management. Against this background, the company’s net profit decreased from almost 9 billion rubles. up to 5.5 billion rubles.
In July 2023, Vladimir Putin transferred the foreign shares of the subsidiary to the temporary management of the Federal Property Management Agency. Deputy Chairman of the Government of Chechnya Yakub Zakriev became the general director of Danone Russia JSC and headed the key subsidiary of the French company in the country – Danone Trade.
At the end of July, the parent company announced that it had written off its Russian business from its balance sheet, the amount of assets was estimated at €200 million. The loss of another €500 million was explained by a non-monetary difference due to the recalculation of the ruble exchange rate to the euro, Danone noted.
Previously, the group of companies Rusagro, Cherkizovo and Chernogolovka were also interested in purchasing the Russian subsidiary of Danone.
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