Western business in Russia: you can’t leave, you can’t stay

After the Kremlin seized the enterprises of French Danone and Danish Carlsberg, foreign companies that want to leave Russia may find it difficult to find buyers, Bloomberg reported.

Consumer goods companies from PepsiCo and Mars to Nestlé and Reckitt Benckiser, which poured into Russia decades ago, investing millions in building factories, hiring local people, and developing local brands, risk losing everything.

“Western assets in Russia are no longer safe,” says Alexandra Prokopenko, a freelance researcher at the Carnegie Eurasia Center for Russia in Berlin. This is a new frontier in the war. If the Kremlin goes further, it will go back to the 1990s: redistribution of assets in favor of more profitable owners.”

Against this background, the success of the deals made earlier can be noted.

The most profitable assets, as journalists from Novaya Gazeta-Europe found out, went to Novatek, which received stakes from France’s Total Energies in the Terneftegaz project and British Shell in Sakhalin-2. Novatek made 40 billion rubles (about 500 million euros) in net profit from these projects last year. The company’s largest shareholders are billionaire Leonid Mikhelson, Putin’s friend Gennady Timchenko, and Total itself (19.4%).

Among other purchases in Russia, Shell sold its Russian network of gas stations and a lubricants plant in the Tver region to Lukoil (Vagit Alekperov and Leonid Fedun). There were 411 Shell-branded gas stations in Russia, some of which were owned by the company itself and some of which operated under the Shell brand on a franchise basis. After the change of ownership, the network developed under the Finnish brand Teboil.

Vladimir Potanin, co-owner of Nornickel, bought the business of the French Société Générale – Rosbank and two insurance companies. In 2022, he also bought Tinkoff Bank, and news about the billionaire’s interest in other assets appeared regularly.

Both Société Générale and businessman Oleg Tinkov were lucky to find a Russian buyer in time. Potanin, who has been a partner of Societe Genérale group for years, bought the Russian division of the bank, Rosbank, which Potanin himself had founded in 1998. Tinkoff, in turn, also offered Potanin to buy his bank for about $300 million and managed to get his money. Today, such a scenario would be almost ideal for many Western companies, but they are finding it more and more difficult to find a buyer.