Russia places Nestlé and Auchan assets under temporary administration

Russian President Vladimir Putin has decreed that the Russian assets of Nestlé and Auchan will be placed under temporary administration, a move that could pave the way for the definitive seizure of these assets.

Temporary Administration and Its Scope

The 2023 presidential decree allows the state to place assets belonging to companies from “unfriendly” countries under temporary control. Ownership is not formally transferred at this stage, but the state-appointed administrator assumes control of the assets. Since the beginning of the war, Moscow has used this mechanism against various foreign companies, including the Russian operations of Danone, Carlsberg, and Fortum.

Impact on Nestlé's Operations

Nestlé, which operates six factories in Russia, employs over 7,000 people and accounts for about 1% of its global sales in the country. The company stated that it would take “all necessary measures” to protect its interests and ensure the continuity of its commercial operations, especially for its employees.

Auchan's Reaction and Retailer Context

Auchan, which entered Russia in 2002, remains one of the largest foreign retailers in the country, with 230 physical stores and an online presence. The chain employs approximately 30,000 people and did not respond to a request for comment. The company remains in the Russian market despite sanctions.

Possible Exit and Asset Sale

This step could force Nestlé to leave the country, compelling it to pay a significant exit fee and sell the business at a discount to a Kremlin-approved buyer. The temporary administration may be followed by the sale of the assets to Russian buyers with ties to the Kremlin.

Expansion of Russian Control Over Foreign Companies

Since the 2022 invasion, Russia has expanded its control over foreign-owned companies, imposing mandatory discounts, exit fees, and other restrictions on asset sales. More than 1,000 companies voluntarily exited Russia in the months following the invasion, while the government consolidated its control over both domestic and foreign businesses.

With information from Valor Econômico, CNN Brasil.