Danone nears sales of temporarily seized Russian assets

Russian company Vamin Tatarstan is set to acquire Danone‘s Russia business for 17.7 billion roubles (US$186 million). Danone will receive 10 billion roubles (US$105 million) for its equity, while the remaining sum will be allocated to service debt within the Russian unit.

Following the seizure by Russian authorities, Danone recorded a substantial write-down of approximately €700 million (US$757 million) on its Russian operations, with earlier warnings suggesting a potential write-off of up to €1 billion (US$1.08 billion) in the event of a unit sale.

The Danone press office said that since the seizure, Danone remained the legal owner of the assets, though the company lost the management control of the business and has accordingly fully deconsolidated its EDP Russia entities from July 2023.

“Since the announcement, our focus has been to ensure the safety of our people while protecting Danone’s assets and rights. Given the uncertainty and volatility of the situation, we can’t comment further,” Danone added.

Dairy assets in Russia

A source in the Russian dairy industry who wished not to be named told a local publication, Agroinvestor, that the government agency was appointed as an intermediate shareholder of Danone assets, so legally, the sale is still possible.

There may be several options for selling – entirely to a specialised player like Vamin or in parts, the source said. “If the deal goes through and gets the green light from the Russian Agricultural Ministry, Vamin will have one of the best dairy assets in the country with high-quality equipment, brands and a professional team,” the source added.

Ayrat Mukhamadeev, the director of a newly-created company owned by Vamin Tatarstan, said the transaction price represented a 56% discount to the business’s market value, according to an independent appraisal cited by the company, Financial Times reported.

Moscow demands at least a 50% discount on all foreign deals after consultants selected by the Russian government have valued the business.

Mukhamadeev noted that to ensure the “continuity” of its former Russian business, Danone had agreed to provide support until the end of July next year to preserve “the high quality of products to which Russian consumers are accustomed”.