Imperial Brands starts talks on transferring business in Russia to local legal entity
MOSCOW. March 15 (Interfax) - Imperial Brands, which had previously announced the suspension of operations in Russia on March 9, 2022, has begun negotiations with a "local third party" on transferring its Russian assets and operations, the tobacco company said in a press release posted on its global website on Tuesday.
"We have begun negotiations with a local third party about a transfer of our Russian assets and operations," according to the press release.
"We believe that in the current circumstances, an orderly transfer of our business as a going concern would be in the best interests of our Russian colleagues. We employ 1,000 people in Russia in our sales and marketing operations and at our factory in Volgograd, and their safety and well-being are our key priority in this process. We will also continue to pay their salaries until any transfer is concluded," the company said.
Imperial Brands earlier said that it was suspending operations in Russia, including production at its factory in Volgograd, as well as sales and marketing.
UK-based Imperial Brands Plc, a division of Imperial Tobacco, produces cigarettes under brand names that include Davidoff, Gauloises, JPS, Fine and West.
In Russia, the company operates through Imperial Tobacco Volga LLC, the production entity, and Imperial Tobacco Sales and Marketing LLC, which had revenue of 70.7 billion rubles in 2020 and net profit of 499.9 million rubles.
The company's press service has declined to answer Interfax's question regarding with whom it is negotiating on transferring the Russian business.
British American Tobacco plc (BAT), whose brand names include Dunhill, Kent, Vogue, Rothmans, Lucky Strike, Java, and others, had previously announced its exit from the Russian market. BAT has initiated a fast-transfer process of its business in Russia in accordance with international and local laws, the company said. BAT will no longer be represented on the Russian market once the process has completed.
BAT marketing director Kingsley Wheaton told the Financial Times that leaving Russia or suspending operations instead of transferring assets would be viewed by authorities as deliberate insolvency, and could lead to criminal charges against the company's management.
Russia's largest tobacco company, Japan Tobacco International (JTI), whose brand names include Winston, LD, Camel, Sobranie, Donskoi Tabak, Kiss, Play, Peter I, and others, had also previously announced that it was suspending new investments and marketing activities in Russia. Philip Morris International , whose brand names include Marlboro, L&M, Bond Street, Parliament, and others, also announced the suspension of investments in Russia. The company also said that it would step up plans to reduce production in Russia.