(Bloomberg) -- Unilever Plc sold its Russian subsidiary to local manufacturer Arnest Group, exiting the country in the third year of Russia’s full-scale war on Ukraine after facing sustained public pressure.
The maker of Dove soap and Knorr stock cubes said the sale includes all of Unilever’s business in the country, including its four factories, as well as its unit in Belarus.
“The sale ends Unilever Russia’s presence in the country,” Chief Executive Officer Hein Schumacher said Thursday.
The financial terms weren’t disclosed, but a report from local media outlet RBC in September said the business was valued at as much as 40 billion rubles ($411 million), reflecting the discounts applied by local authorities to make it harder for multinationals to exit Russia.
Arnest, a Russian maker of perfume, cosmetics, and household products, has previously snapped up western companies’ operations in the country. It acquired Heineken NV’s assets in Russia for €1 last year, and Ball Corp.’s beverage packaging business for $530 million in September 2022.
Unilever’s Russia business employs about 3,000 people, with net assets of around €600 million ($656 million).
Russian Taxes
Valeriia Voshchevska, the Ukraine Solidarity Project’s lead campaigner, called on Unilever to donate the proceeds of the sale to help Ukraine’s reconstruction and development. The Kyiv School of Economics estimates that Unilever paid $67 million in profit taxes to the Russian state over the past two years, while western companies collectively paid as much as $20 billion each year.
The consumer goods company came under criticism for staying in Russia long after the invasion. A Ukrainian anti-corruption body added the company to its list of “International Sponsors of War” last year.
The company had been preparing the business for a sale over the past year, according to CEO Schumacher. “This work has been very complex, and has involved separating IT platforms and supply chains, as well as migrating brands to Cyrillic.”
While Unilever and rival Nestle SA condemned Russia’s February 2022 invasion, they continued to supply consumers in the country with goods like Magnum ice cream and Nescafe coffee on the grounds that they were providing essential products and looking out for their employees. For some multinationals, sales in the country rose.
Yet the Kremlin also made it difficult to leave. Besides applying mandatory discounts to valuations, it also seized control of western assets when companies tried to go. This happened to yogurt maker Danone SA, which eventually managed to negotiate an exit, and Danish brewer Carlsberg A/S, which is fighting the seizure in the courts.
Campaigners intend to use Unilever’s move to increase pressure on western multinationals that remain, like Mondelez International Inc. and PepsiCo Inc. “Unilever’s case clearly shows that, given enough political will, a clean exit from Russia is possible,” said Nataliya Popovych, a co-founder of the B4Ukraine coalition.
A Nestle spokesman said the company’s position on its Russian activities remains unchanged after Unilever’s move. Representatives for Mondelez and PepsiCo didn’t immediately respond to requests for comment.
(Adds campaigners in seventh and second-to-last paragraphs)
©2024 Bloomberg L.P.