Unilever to sell all Russian assets to consumer goods company Arnest
06 Sep 2024 --- Unilever is reportedly planning to sell its Russian business assets to local company Arnest, marking a complete exit from the country amid the Ukraine war. The deal is awaiting official confirmation by the Kremlin and is said by a Russian media group to have included a steep discount. All brands under the Unilever Rus LLC subsidiary are included in the deal.
According to reports, the sale could bring Unilever up to US$500 million. Under Russian law, asset sales require a 50% discount and a 10-15% exit tax.
Arnest Group has been one of the main beneficiaries of the international business exodus from Russia since the outbreak of war in Ukraine. The company’s leader, Alexey Sagal, is one of many entrepreneurs gaining contracts unavailable to business moguls restricted by international sanctions.
Bloomberg Billionaires Index estimates Arnest’s assets to be worth over US$1 billion. The group previously purchased Ball Corporation’s beverage packaging operations for US$530 million, and Heineken’s operations in a US$100 million debt repayment deal. It also made a US$800 million bid for Carlsberg’s brewery business.
Last year, Unilever said it was planning to remain in Russia despite ethical concerns over the war, saying that its operations provide everyday people in the country basic food and hygiene products. It also employed around 3,000 people, and highlighted the fact that a complete exit would mean the Kremlin taking over and profiting from its assets.
“We do not think it is right to abandon our people in Russia,” the company announced. “We believe remaining (with strict restraints) is the best option, both to avoid the risk of our business ending up in the hands of the Russian state, either directly or indirectly, and to help protect our people.
Unilever also ceased all imports and exports from Russia and halted capital flow in and out of the country, and donated US$15 million in humanitarian support to the war.
Packaging business exits
Unilever is one in a long line of packaging and consumer goods companies to abandon Russia since 2022. Huhtamaki sold its operations to local business Espetina for €150 million (US$150 million).
Last year, Mondi completed its exit from Russia by selling its Syktyvkar facility to Sezar Invest, a Moscow-based real estate development company for approximately €775 million (~US$826 million).
Stora Enso divested its three corrugated packaging plants in Russia in 2022, saying that local ownership and operation would provide a more sustainable long-term solution for these businesses.
Last month, Russian President Vladimir Putin signed a decree ordering the temporary seizure and nationalization of metal packaging manufacturer Silgan Holdings’ production sites.
By Louis Gore-Langton
