Moscow seizes Russian subsidiaries of Danone and Carlsberg’s Baltika

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Moscow has taken control of the Russian subsidiaries of Danone and of Carlsberg’s Baltika Breweries, according to a decree signed into law by President Vladimir Putin on Sunday.

The decree said Russia was taking under “temporary administration” the shares of Russian companies owned by the French food group and the leading Russian beer producer.

The move marks the first time that Russia has seized the subsidiaries of western businesses since it took over Finland’s Fortum and Germany’s Uniper in April.

The Kremlin did not provide further details on Sunday but has previously described such moves as a response to western confiscations of Russian assets.

An April decree allowed the state to take over the assets of companies from countries deemed unfriendly by the Kremlin in order to “protect Russian property and national interests”.

Baltika, based in St Petersburg, produces some of the most recognisable beer brands in Russia and has 8,400 employees across eight plants, according to the Carlsberg website.

In March last year, soon after the start of Russia’s full-scale invasion of Ukraine, Carlsberg said it had decided “to seek a full disposal of our business in Russia”.

Late last month, it announced that it had found a buyer for Baltika and had applied to the regulatory commission set up by the Kremlin to handle western corporate exits in order to complete the transaction.

The company could not immediately be reached for comment.

Companies from “unfriendly” countries can only sell their Russian assets for a maximum of half their value and must make a “voluntary contribution” to Russia’s war chest of 5-10 per cent of the sale price. Deals require the approval of the government — and of Putin himself in the energy and financial sectors.

Assets seized under the system launched by decree in April are to be placed under the control of Russia’s federal state asset management agency unless Putin decides otherwise, and only he can reverse the external control.

Danone’s Russia business is the country’s largest dairy company. It has also previously announced plans to sell its Russian assets, saying the deal could lead to a write-off of up to €1bn. However, it had not yet announced that it had found a buyer.

The company said it is “currently investigating the situation” and is “preparing to take all necessary measures to protect its rights as shareholder . . . and the continuity of the operations of the business”.

The Russian government’s decision came a complete surprise, according to a person with knowledge of the issue, since it had been close to finalising the deal. “We wonder whether there is a diplomatic dimension to this, due to France’s support for Ukraine,” the person said.

Dmitry Peskov, a spokesperson for Putin, told the FT in June that western investors and companies were “more than welcome” in Russia but added that “if a company doesn’t fulfil its obligations, then, of course, it goes in the category of naughty companies . . . We say goodbye to those companies. And what we do with their assets after that is our business.”