Mondi finally pulls out of deal to sell Mondi Syktyvkar to Kharitonin company, searching for new buyers

MOSCOW. June 5 (Interfax) - Mondi plc has pulled out of a deal to sell its largest Russian asset, Mondi Syktyvkar , to Augment Investments Limited, a company close to Viktor Kharitonin's Pharmstandard JSC . The press service of the Austrian group announced on Monday that the relevant notification was sent to Augment.

The reason for leaving the deal was "lack of progress in obtaining the necessary permissions to complete this transaction."

Last August, the Austrian Mondi group announced that it had entered into an agreement to sell Mondi Syktyvkar for 95 billion rubles, or about 1.5 billion euros, to the Augment investment company controlled by businessman Kharitonin. Later, sources in the market reported that the deal was not approved by the government commission for the control of foreign investment.

Mondi remains committed to selling Mondi Syktyvkar and will "continue to consider all alternative sale options," the company said in a statement released today.

The sale of three Russian factories for the production of corrugated cardboard and packaging to the Russian Gotek group remains in force, the press release said. The Austrian group announced the deal last December. Gotek acquired Mondi Pereslavl (Yaroslavl region, production of food and non-food flexible packaging), Mondi Aramil (Sverdlovsk region, the only plant in the Russian Federation with full production cycle flexible polymeric food, non-food and industrial packaging) and Mondi Lebedyan (Lipetsk region, production of packaging from corrugated cardboard) for 1.6 billion rubles, or about 24 million euros.

Mondi Syktyvkarsky is one of the largest producers of pulp and paper products in Russia with an output of about 1.2 million tonnes per year. The company produces office, offset and newsprint paper, containerboard, and dry market pulp. In 2022, Mondi Syktyvkarsky had revenue of 78 billion rubles, an increase of 9% YoY, and a net profit of 22.5 billion rubles, up 18% YoY.

The failed deal with Mondi is not the only attempt by Kharitonin to enter the Russian market for the production of pulp and paper products, and the businessman already has assets in this area: in February 2023, Augment Investments Limited, an international company registered in Kaliningrad, became the owner of 100% of the charter capital of Kama LLC, a Perm manufacturer of coated cardboard and paper. The approximate amount of the transaction was 14 billion rubles.