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Unilever has sold its Russian operations for 520 million euros after approval by authorities in Moscow to a local manufacturer known for buying up Western assets following an exodus of companies from the country.
London-listed Unilever confirmed on Thursday it had reached an agreement to sell assets worth around €600 million to Russian manufacturer Arnest, including its operations in Belarus. People close to the deal confirmed the amount.
“Over the past year we have carefully prepared the activities of Unilever Russia for a possible sale,” said CEO Hein Schumacher. “This work was very complex and involved separating IT platforms and supply chains, as well as migrating brands to Cyrillic.”
“The completion of the sale ends Unilever Russia’s presence in the country,” he added.
Since Moscow’s massive invasion of Ukraine resulted in a wave of corporate departures from Russia, Arnest, owned by Russian industrialist Alexei Sagal, has acquired the local assets of US can maker Ball Corp, Dutch brewer Heineken and Swedish cosmetics group Oriflame.
The deals have made Sagal one of the main beneficiaries of Russia’s biggest asset reallocation since the fall of the Soviet Union, more than doubling Arnest’s revenue from sales to Rbs13.9 billion ($143 million) last year , while basic earnings are up about 24%. time.
Sagal has often acquired the assets at steep discounts. Heineken sold its activities to Arnest for a symbolic €1, and at a loss of €300 million for the brewer.
Unilever’s Russian operations include four factories and accounted for around 1 percent of the group’s sales and net profit in 2023.
The consumer goods group came under heavy criticism from activists and consumers for remaining in Russia while others left on moral grounds after the 2022 invasion of Ukraine.
The FTSE 100 company was labeled an ‘international war sponsor’ by the Ukrainian government, which published a list of companies it concluded were indirectly contributing to the war.
Unilever had previously given no indication that it planned to exit the market. In February, the company said it had revised its position and concluded that “the containment actions we took at the beginning of the war minimize our economic contribution to the Russian state.”
Companies trying to leave Russia are struggling to extract value from deals. The Kremlin imposes a mandatory 50 percent discount on assets from “unfriendly” countries sold to Russian companies, and an “exit tax” of at least 15 percent.
It is also becoming increasingly difficult to find local buyers who are acceptable to both the Western seller and the Russian authorities, and whose involvement does not violate Western sanctions.
