Danone's Russian business removed from state administration amid information on imminent sale to local investors

MOSCOW. March 14 (Interfax) - French corporation Danone's Russian business has been removed from temporary state administration amid rumors of its imminent sale to local investors.

President Vladimir Putin signed a decree on Wednesday reversing the transfer of Danone Russia JSC and Danone Trade JSC (following the transition to state management in July last year, they were renamed H&N and H&N Trade, respectively) to the temporary management of the Federal Property Management Agency.

The Financial Times wrote in February, citing non-public documents, that Danone was planning to sell its Russian business to a Tatarstan-based company called Vamin. Vamin belongs to Mintimer Mingazov, who was introduced to the board of directors of H&N after the company was transferred to state management and was headed by the Minister of Agriculture of Chechnya, Yakub Zakriev, the documents say.

In a letter addressed to Russian Agriculture Minister Dmitry Patrushev, Airat Mukhamadeev, director of a newly created company owned by Vamin, said it had agreed to pay 17.7 billion rubles ($191.5 million) to gain control of Danone's Russian business, FT said. Moreover, 7.7 billion rubles of the sum will be used to service debt in the Russian business, while the rest will be paid to Danone for its share in the company.

In his letter, Mukhamadeev also said that the transaction price represents a 56% discount to the market value of the business, as assessed by a third party for the company. In addition, he said that to ensure the continuity of its former Russian business, Danone has agreed to provide support until the end of July next year as H&N continues to localize the production of certain ingredients to maintain "the high quality of products that Russian consumers are accustomed to."

Danone had no comment at the time.

The SPARK-Interfax analytical system shows that the revenue of Danone Russia in 2022 increased to 92.9 billion rubles from 85.1 billion rubles the year before, while net profit decreased to 5.6 billion rubles from 8.9 billion rubles. Danone Trade's revenue reached 112.7 billion rubles in 2022 versus 109.9 billion rubles in 2021, while net profit was 612.7 million rubles against 1.4 billion rubles, respectively.