The United States delayed the departure of KFC from Russia due to its contribution to the country’s budget
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The US Treasury’s Office of Foreign Assets Control (OFAC) has delayed for several months the departure of Yum! Brands (owns KFC) from Russia due to Moscow’s demand for a contribution to the federal budget. About it reports Reuters with reference to the head of the legal department of Unirest (the Russian legal entity of Yum! Brands) Sergei Levin.
It is noted that this happened when the deal was already close to completion. Levin explained that the buyer process and agreement on the basic terms took “some time,” then approval of the sale of the company’s shares was received by the government commission. However, after this, another condition appeared – a contribution to the federal budget, which in the United States was called an “exit tax,” the lawyer said.
Levin clarified that this requirement appeared in December 2022, after which the completion of the transaction was delayed. Then the company agreed on the procedure for paying the contribution, but at that moment OFAC intervened. “As a result, the settlement took quite a long time. We successfully closed everything in mid-April,” Levine said. He added that Unirest hopes to complete the brand transition from KFC to Rostic’s in 2024. By the end of 2023, 60% of the 1,200 restaurants in Russia are expected to be owned by Rostic’s.
April 17 Yum! Brands closed a deal to sell Russian KFC restaurants to the Izhevsk company Smart Service. As a result of the transaction, the company receives 70 restaurants and becomes a franchisor for 1,058 partner outlets, which must be rebranded as Rostic’s.
Yum! Brands, which owns the KFC brand, announced the suspension of investments in Russian assets in March 2022 against the backdrop of the start of a Russian special operation in Ukraine. In total, at the end of 2021, more than 1,100 KFC outlets and 50 Pizza Hut outlets were opened in the Russian Federation. Of these, the company owned only 70 KFC restaurants, which were closed in March.
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