It is only the second time the Kremlin has used the decree to seize assets.Credit:AP
The yoghurt maker and the brewer had been trying to leave Russia. The seizures are a warning to others like regional Coke bottler Coca-Cola HBC,which derives 12 per cent of its revenue in Russia and is among the most exposed according to Morgan Stanley.
Danone shares fell by 0.8 per cent and Carlsberg slid by 1.8 per cent on Monday. Writedowns were already largely priced in after Russia restricted whom they could sell to,the contributions they would have to make to state coffers and prohibited taking money out of the country.
The decision won’t affect Danone’s financial guidance and the company is taking steps to safeguard its shareholder rights in Russia,the Paris-based food company said. Earlier this month,the company said it would rebrand Activia in Russia to AktiBio. Carlsberg called the decision “unexpected” and indicated it’s assessing legal and operational consequences as well as any financial impact.
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Putin signed a decree in April allowing for temporary state control over the assets of companies or individuals from unfriendly states – which include the US and its allies – in response to similar moves,or the threat of them,by those countries.
Sunday’s move is the second time the Kremlin has used the decree to seize assets. Previously,Russia took control of utilities owned by Finland’s Fortum Oyj and Germany’s Uniper SE.
Companies including Nestle SA and Mondelez,which have factories and thousands of operations in Russia,have performed a balancing act of keeping production going and the Russian government satisfied while mollifying Western stakeholders by saying that they were only selling essential products. Sharply reducing local operations or headcount could also attract Kremlin retaliation.