This week, the Federal Antimonopoly Service of Russia approved the application of the Russian cheese producer TK “Multipro” for the purchase of the company “Wimm-Bill-Dann Drinks”. PepsiCo, the parent company of the acquired organization, explained that they were selling the production site in Ramenskoye, which has not been operating since 2015. However, this is an indicative case, because PepsiCo itself announced in early March that it was suspending the sale of beverages and advertising activities in Russia, but would continue to sell baby food.
Some foreign companies decided to sell the business in whole or in part, others to transfer it to the local administration, but someone else found other ways. The experts interviewed by RG agree that many of the companies that “leave” are doing everything possible so that in the future they return and continue working, keeping their assets on Russian territory.
The simplest solution in the current conditions is the sale of the business. If a foreign company has decided to leave Russia completely and does not intend to return, it only has to find a buyer and formalize the transfer of assets. For example, the Anheuser-Busch InBev brewing corporation, which produces Klinskoye and Hougaarden beer, has taken this path. They plan to sell their stake in Russia’s AB InBev Efes to a Turkish partner who is also involved in the project: Anadolu Efes.
Finnish companies acted somewhat differently: they do not sell even part of the business, but all assets in Russia. Therefore, the manufacturer of disposable tableware Huhtamaki plans to sell its business in the Russian Federation – these are four manufacturing companies in the country. And Valio, a maker of butter and processed cheeses, has already found a buyer. The company sells to the Russian group Velcom all its assets in the Russian Federation, including a plant in the Moscow region and the rights to the Viola brand.
A similar decision in Russia was announced, for example, by the Polish LPP SA, owner of the Reserved, Cropp and Sinsay brands. The international group Mondi, for its part, will sell three of its paper production plants in Russia. Considering such a solution as one of the options, in particular, Japan Tabacco, one of the world’s largest manufacturers of cigarettes and tobacco products, as well as the Austrian group Raiffeisen Bank International.
Transfer to Russian managers and local authorities.
Another solution is to carry out a kind of organizational maneuver by selling the business in Russia to the local management. Yesterday’s managers, having become new owners, will be able to continue working as before, without the need to delve deeper into business processes. So did, for example, the international consulting firm Accenture Plc and the British car dealer Inchcape. The French electrical engineering company Schneider Electric, for its part, has already agreed on a similar decision with the Russian authorities.
As Roman Tyshkovsky, managing partner of Odgers Berndtson Russia, pointed out in a conversation with RG, a foreign company can also issue a general management license to its top management or transfer a share with the right to buy back to Russian partners. “Another option is to transfer the participation to the state or municipalities. This strategy was chosen by the Renault-Nissan-Mitsubishi alliance, which transferred its assets to the Russian authorities. For Renault, the Russian market is the second largest market after the French. one, then the company wants to keep the opportunity to return, and that is important”, explained the expert.
Earlier it became known that the Renault company will transfer its stake in AvtoVAZ to the Central Research Institute of Automobiles and Motors (NAMI) with the right to repurchase, and the Renault plant in the capital will go to the Moscow government.
Foreign companies can temporarily transfer their interest in the business to the state, municipalities or a trustee
In addition, Tyshkovsky said that there are companies that are ready to permanently close their offices and lay off 100% of the staff in Russia. He explained that, as a general rule, these were representative offices of US companies that did not have local assets. Russian representative offices in such a situation were only engaged in the distribution of products, for example, in the retail sector.
Option contracts and trust management
Gayk Martirosyan, managing partner of the consulting firm Quattor Advisory, in turn, noted that foreign players can also use the temporary withdrawal of membership from the Russian company. To do this, they enter into option contracts that will allow them to repurchase shares of Russian companies for a certain period of time and continue their activities as if nothing had happened.
However, according to the expert, such a scheme is associated with many legal and tax subtleties. The statute must provide for the very procedure for the withdrawal of a participant from a Russian company, and at the stage of payment of the real value of the share, difficulties may arise due to monetary restrictions. It is not easy to deal with the taxation of such maneuvers.
Martirosyan explained that the alternative to exit is to transfer the company’s shares to the trust administration. “The advantages of fiduciary management are the relative ease of entering into a contract with the trustee and the control over it. Formally, as long as it continues to own a share, a foreign company will be able to demand management reports, as well as return at any time actions of the management in unilaterally terminating the agreement”, – said the interlocutor “RG”.
In addition, the transfer of shares in fiduciary administration does not generate legal, fiscal and financial consequences for the withdrawal of the participants, which means that there will be no problematic situations. However, the expert warned that in this case much depends on the manager’s qualifications, so the selection of a candidate must be approached very responsibly.
In mid-April, the German company OBI GmbH, which owns the construction store chain of the same name, announced the transfer of the Russian business to trustee management. The founder of the consulting group “Audit Group” and the legal agency “Cesar Consulting” Boris Lyuboshits became a manager. Later, the Russian group of investment and construction companies MAX wanted to buy the network, which had already submitted the relevant documents to the Federal Antimonopoly Service.
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