Danone’s Russian subsidiary was removed from the Kremlin-controlled list

The consequences of this decision are not yet clear. On Wednesday, the Kremlin issued a decree removing the Russian subsidiary of French agri-food giant Danone from the list of companies temporarily under the control of the Russian state. The decision comes amid press reports that Danone is looking to sell its Russian subsidiary to a businessman with ties to Chechen leader Ramzan Kadyrov, a close ally of Russian President Vladimir Putin.

Last July, Russia issued a decree transferring “temporary” control of Danone’s Russian assets to the Federal Agency for State Property Management, in what Moscow portrayed as a response to sanctions on the companies.

Vladimir Putin signed a new decree on Wednesday reversing this decision. The Kremlin offered no explanation, and the consequences of controlling Danone’s Russian unit, neither in practice nor in legal terms, were immediately clear. The Russian “daughter” of the food giant has already been renamed, and people close to the Kremlin have been appointed its head.

The transaction amount was almost 200 million euros.

Last month, the Financial Times wrote that the French group was hoping to sell its Russian assets to the Russian dairy company Vamin Tatarstan, owned by Mintimer Mingazov, who is linked to Ramzan Kadyrov. Citing a document sent to the Russian Ministry of Agriculture and anonymous sources, the Financial Times estimated the deal at 17.7 billion rubles (177 million euros).

Last year, Russian authorities transferred control of Danone Russia to Yakub Zakriev, the nephew of Ramzan Kadyrov. Mintimer Mingazov was then appointed to the board of directors of the company, which was renamed Life and Nutrition. This takeover, as well as the takeover of the Russian division of the Danish beer manufacturer Carlsberg, caused strong protests in the West.

Following the offensive on Ukraine on February 24, 2022, and the first economic sanctions imposed by the West, many multinational corporations left Russia and others suspended their activities there in the oil, automobile and even luxury manufacturing sectors. Russia has imposed strict obligations on Western companies seeking to leave the country. In particular, they must sell their Russian assets for a maximum of 50% of their market value.