Danone obtains clearance to sell Russian assets

MOSCOW. March 25 (Interfax) - France's Danone has obtained clearance from the Russian regulatory authorities to sell its business in Russia.

"Danone announces that the Russian regulatory approvals required for the disposal of its EDP business in Russia to Vamin R LLC have been obtained. The closing of this disposal is expected in the coming weeks," it said in a statement.

Danone launched the transfer process of this business in October 2022. "The total loss recognized by Danone in its accounts amounts to 1.2 billion euros," it said.

According to the Unified State Register of Legal Entities, Vamin R LLC was registered on September 25, 2023. Its owners are Vamin Tatarstan with 99% and Ruslan Alisultanov with 1%. The beneficiary is Mintimer Mingazov.

Russian President Vladimir Putin on March 13 signed a decree cancelling the transfer of JSC Danone Russia and JSC Danone Trade to the temporary management of the Federal Property Agency. These Russian subsidiaries of the French company were renamed H&N and H&N Trade, respectively, after they were put under state management in July 2023.

Vedomosti also reported that in addition to Vamin Tatarstan, Chechen Deputy Prime Minister Yakub Zakriyev, nephew of Chechnya's leader Ramzan Kadyrov, was interested in buying the business. Zakriyev headed H&N from July 2023 to March 13, 2024, while the company was under the temporary management of the Federal Property Agency by order of the Russian president.

The Financial Times, citing non-public documents, reported in late February that Danone planned to sell its business in Russia to Vamin Tatarstan. According to these documents, Vamin is owned by Mintimer Mingazov, who was appointed to the board of directors of H&N after the company was put under state management and Zakriyev was appointed to head it.

In a letter to Russian Agriculture Minister Dmitry Patrushev, the director of a recently created company owned by Vamin, Airat Mukhamadeyev said that it had agreed to pay 17.7 billion rubles ($191.5 million) for control of Danone's Russian business, the FT said. Of this amount, 7.7 billion rubles will go toward servicing the debt of the Russian business and the rest will go toward paying for Danone's stake in the company.

Mukhamadeyev said in the letter that the price of the transaction represents a 56% discount to the market value of the business, according to an independent appraisal cited by the company. He also said that, in order to ensure the continuity of its former Russian business, Danone has agreed to provide support until the end of July 2025, since H&N is continuing to localize production of certain ingredients in order to maintain the "high quality of products that Russian consumers are used to."

Danone declined to comment at the time.

Danone Russia closed 2022 with net profit down to 5.6 billion rubles from 8.9 billion rubles a year earlier, on revenue up to 92.9 billion rubles from 85.1 billion rubles, the SPARK-Interfax system showed. Danone Trade's net profit fell to 612.7 million rubles from 1.4 billion rubles, although revenue rose to 112.7 billion rubles from 109.9 billion rubles.