Kremlin increases pressure on companies seeking to leave Russian market — report

Kremlin toughens requirements for companies that want to leave Russia

The Russian government is ramping up pressure on foreign companies planning to abandon the Russian market, demanding ever larger discounts on buyout deals, Reuters reported on Aug. 25, citing informed sources. 

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In addition to the Kremlin already demanding a 50% discount on all foreign buyout deals, Russian authorities are also requiring direct monetary contributions to the state budget of no less than 10% of the price.

Some transactions are then met with demands for further discounts before the government greenlights them, sources say.

According to officials at Russia's Finance Ministry, they "do not force a reduction in final sale prices, but may adjust [value] assessments during the process."

"Preparing a deal by the relevant department can take up to six months," the ministry noted.

The pricing of companies can also be "adjusted" by Russia's Economy Ministry and the Central Bank.

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A government commission overseeing foreign investments needs to approve deals involving companies from so-called “unfriendly” countries. Banks and energy companies also need personal approval from Russian dictator Vladimir Putin to sell.

According to market sources, for some companies the additional “discount” may amount to 20−30%.

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It’s like “an unpredictable black box,” noted one source. Another confidant revealed that deals exceeding $100 million are particularly at risk of rejection. They also added that the recent price revisions slow sales, forcing companies to consider alternatives.

On July 16, Putin signed a decree to take over assets of major food industry companies — Baltika Breweries and Danone Russia.

Read also: Carlsberg to sell its Russia business by summer

Denmark’s Carlsberg Group, which owns Baltika Breweries, announced plans to exit the Russian market in March 2022. In June 2023, it was reported that they had agreed to sell their Russian business, without revealing the details of the deal.

Carlsberg later expressed "shock" at Putin's decision to effectively nationalize their Russian assets.

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