By The Kremlin has approved the sale of British consumer goods giant Unilever’s Russian subsidiary at a significant discount, according to a report by the RBC business news outlet on Thursday. This development underscores the ongoing challenges faced by Western companies attempting to exit the Russian market following the invasion of Ukraine.
RBC, citing sources familiar with the matter, reports that Russia’s foreign investment commission has given the green light for the sale of Unilever Rus, which employs around 3,000 people. The sale price is estimated to be between 35 billion and 40 billion rubles ($391-447 million). While a buyer has reportedly been determined, their identity remains undisclosed.
Unilever, known for brands such as Dove soap and Magnum ice cream, halted imports, exports, and advertising in Russia in March 2022 following the full-scale invasion of Ukraine. However, the company stopped short of a complete exit, citing concerns that its assets would be seized by the Russian state.
The sale reflects the complex environment for corporate exits from Russia, which now involves several constraints. These include a mandatory 50% discount on assets from businesses in countries deemed “unfriendly” to Russia, a minimum 15% exit tax, and the challenge of finding Russian buyers who are both unsanctioned by the West and acceptable to Moscow. These exit fees are reportedly applicable to the Unilever Rus deal as well.
Despite suspending most of its operations in Russia, Unilever has faced criticism from Ukraine. The company was added to Kyiv’s “International Sponsors of War” list for continuing to operate in the country. This highlights the delicate balance companies must strike between managing their assets and responding to geopolitical pressures.
Financially, Unilever Rus nearly doubled its net profit in 2022 before experiencing a decline in 2023, illustrating the complex economic landscape for foreign companies in Russia during this period of geopolitical tensions.
The sale of Unilever’s Russian subsidiary is part of a broader trend of Western companies reevaluating their presence in Russia amid ongoing international sanctions and pressure related to the conflict in Ukraine. As the situation continues to evolve, the terms of such corporate exits and their implications for both international businesses and the Russian economy remain a subject of close observation by financial analysts and policymakers alike.
The challenges faced by Unilever in this sale process provide insight into the difficulties other multinational corporations may encounter as they navigate the complex terrain of international business in times of geopolitical strife. The outcome of this sale could set precedents for how other companies approach their exit strategies from the Russian market.
As more details about the sale become available or if Unilever issues an official statement, this story may be updated to provide a fuller picture of the transaction and its implications for the global business community.
