CABHF - Danone Carlsberg might be in for the long haul after Russian takeover

2023-07-19 07:03:27 ET

The Russian government took control of Danone ( OTCQX:DANOY ) and Carlsberg's ( OTCPK:CABGY ) operations in the country after oligarchs expressed interest in the assets, the Financial Times reported citing sources close to the decision.

Vladimir Putin on Sunday ordered the "temporary" takeover of the French yoghurt maker's ( OTCQX:DANOY ) Russian unit and Baltika, a local brewer owned by Carlsberg ( OTCPK:CABGY ).

On Tuesday, Chechen Agriculture Minister Yakub Zakriev was appointed head of Danone ( OTCQX:DANOY ) Russia. Zakriev is the 32-year-old nephew of Ramzan Kadyrov, head of Chechnya.

Meanwhile, Putin allies Yuri and Mikhail Kovalchuk have signaled interest in Baltika. Yuri is often called Putin's personal banker. Note that the Kovalchuk brothers as well as Kadyrov are under western sanctions.

"It's a new redistribution of wealth" to Putin's allies, the report quoted a Russian oligarch as saying.

Dmitry Patrushev, Russia's agriculture minister, is said to have played a key role in Danone ( OTCQX:DANOY ) and Carlsberg's ( OTCPK:CABGY ) exits. "The minister wants to place his own people in there to take control of the business," said a person close to the Danone bidding process.

Kremlin's moves showed that "no western assets are safe in Russia anymore," said Alexandra Prokopenko, a non-resident scholar at Carnegie Russia Eurasia Center.

Moscow can "take assets away from foreigners and give them to regime-friendly owners. This is a signal that anything goes," she warned.

As for the the appointment of temporary management of Baltika,  Carlsberg ( OTCPK:CABGY ) said this was done without its knowledge or approval. "It is unclear what implications this development will have on the ongoing operations of Baltika in Russia as well as the current sales process," it said in a statement .

More updates on Russia

• Russia to pull out of Black Sea grain deal, sending wheat prices surging
• Moscow takes control of Danone Russia, Carlsberg's Baltika
• Western Sanctions On Russia Are Finally Having An Impact

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