Russia Ties Nestle, Auchan Asset Grabs to Europe Aid for Ukraine
(Bloomberg) — The Kremlin linked the seizure of Russian assets belonging to Swiss food giant Nestle SA and French supermarket chain Auchan to European military support for Ukraine.
“We are talking about companies, European companies from unfriendly countries,” Kremlin spokesman Dmitry Peskov told reporters Friday. “One of the factors taken into account when making this decision was that this is an unfriendly country, and that this is an unfriendly country that is currently most actively involved in military actions against our country.”
President Vladimir Putin issued a decree late Thursday ordering stakes in the Russian businesses of Nestle and Auchan to be placed under temporary administration by a company called AO L.E.V. Menedzhment.
It’s the largest takeover of foreign corporate assets in Russia since at least 2024. It comes amid deep tensions with Europe, which has imposed sweeping sanctions on Russia and is sending tens of billions of dollars of weapons and financial aid to support Ukraine’s defense against the full-scale invasion Putin ordered in February 2022.
AO L.E.V. Menedzhment was registered in Moscow in 2024 with charter capital of just 15,000 rubles ($177) and a single employee, according to Russian registry data. It had little public profile before the decree.
Shares of Nestle fell as much as 1.9% in early trading on Friday, hitting a three-month low before slightly paring back.
The Kremlin’s action highlights the increasingly difficult business environment faced by international companies that remain in Russia. More than a thousand businesses left the country after the war began and Moscow was hit with multiple rounds of international sanctions. Still, many major names including PepsiCo Inc., Mondelez International Inc. and Raiffeisen Bank International AG continue to operate in Russia under growing restrictions, although have scaled back their operations.
Russia approved a list of countries it considers “unfriendly” shortly after it began the invasion. Along with all European Union states and the US, several other countries including Switzerland are on the list. Financial and business transactions involving companies from those countries are subject to additional restrictions and regulatory requirements in Russia.
Nestle said in a statement Friday that it took note of Putin’s decree and was assessing the situation and its options. “Nestle is committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of all stakeholders, particularly its employees,” it said.
The Swiss government is expected to make a statement on the development later Friday.
Switzerland mirrored EU sanctions on Russia over the war in Ukraine, breaking with its previous approach to neutrality. The move prompted an initiative to impose a stricter interpretation of the country’s traditional doctrine, and voters will decide on the proposal on Sept. 27.
Russia has publicly weighed in on the campaign in favor of tighter neutrality. Approval would bar Switzerland from imposing sanctions on belligerents without UN backing, meaning the country could no longer maintain its current Russia measures on the same basis.
Auchan Retail Russia said it had requested clarification of the decree and would provide a more detailed response once it has received the relevant information, the company told the state-run Tass news service.
Russia has taken over dozens of international assets since 2023, when it amended legislation to create a temporary management mechanism allowing the state to seize control of holdings owned by companies from “unfriendly” countries. They include the local units of Finnish utility Fortum Oyj, French yogurt maker Danone SA and Danish brewer Carlsberg A/S.
Orders for temporary management have often been followed by transfers of assets to Russian buyers approved by the authorities, many of them with links to the Kremlin. Danone and Carlsberg had their assets briefly returned to them, but were then required to sell them to Russian companies at big discounts.
The Kremlin has also made it increasingly difficult for foreign companies to leave Russia. Transactions involving investors from “unfriendly” countries require sellers to accept a discount of at least 60% and there is also a special exit tax.
In August, Putin signed a law allowing Russian courts to block foreign investors that left the country after the 2022 invasion of Ukraine from buying back assets they had sold. He has repeatedly said that reentering the Russian market will be difficult.
Still, his late-night decree on Nestle and Auchan was unexpected. The Kremlin hadn’t used the mechanism against assets of comparable value since at least 2024, when plants belonging to AB InBev Efes, a joint venture between Belgian brewer AB InBev and Turkey’s Anadolu Efes, were placed under temporary management.
Nestle’s Russian Move Risks Writedown; Share Hit Limited: React
Nestle has operated in Russia since the 1990s but scaled back its business after 2022, suspending some brands and halting non-essential imports and exports, as well as advertising and capital investment. The Swiss giant has six plants in Russia, employing more than 7,000 people, where it continued to produce what it described as essential and everyday food products.
Russia accounts for about 2% of Nestle’s global sales, equivalent to roughly 2 billion Swiss francs ($2.5 billion) annually.
Losing control of its Russian assets could amount to a write-off of about 1 billion Swiss francs, according to analysts led by David Hayes at Jefferies.
Nestle’s response to Putin’s order is “non committal” so far, though the precedents of Danone and Carlsberg aren’t encouraging, said Warren Ackerman, an analyst at Barclays. “We read the decree as a step towards a potential ownership change, though timing, process and compensation are unknown,” he added.
Auchan was among the early wave of major Western consumer businesses to expand into Russia, opening its first store there in 2002. The company went on to build a sprawling network of stores, and now operates 230 supermarkets and hypermarkets across the country, according to its website.
Earlier this year, a little-known company, KS Logistics, asked Putin to place Nestle’s local entities under temporary management, the Kommersant newspaper reported. Nestle told the outlet then it hadn’t received any inquiries from Russian authorities and that its offices and factories continued to operate.
It’s not clear whether KS Logistics has any connection to L.E.V. Menedzhment. The latter appointed Andrey Krayushkin as its new chief executive officer just last week, according to Russian registry data.
Krayushkin served until at least 2020 as first deputy head of the Interior Ministry’s migration department and held the rank of major general, Russian opposition outlet Novaya Gazeta Europe reported Thursday, citing databases it said were in its possession. Bloomberg couldn’t independently verify the claim.
–With assistance from Angelina Rascouet, Fabienne Kinzelmann, Emily Cohn and Bastian Benrath-Wright.
(Updates throughout.)
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