The sale of Unilever’s Russian subsidiary at a discounted price has been approved by Moscow, as reported by RBC business news outlet. Unilever took the decision to halt imports, exports, and advertising in Russia following the invasion of Ukraine earlier in 2022. However, the company did not completely exit the Russian market, fearing that its assets would be taken over by the Russian state. The sale of Unilever Rus, employing around 3,000 people, is expected to be between 35 billion and 40 billion rubles ($391-447 million), with a buyer already determined but not disclosed.
Exiting from Russia has become more challenging for foreign companies due to various factors, including a mandatory 50% discount on assets for businesses from countries considered “unfriendly” to Russia, a 15% exit tax, and the difficulty of finding Russian buyers acceptable to Moscow and unsanctioned by the West. These exit fees are also applicable to the Unilever Rus deal. Despite scaling back its operations in Russia after the Ukraine invasion, Unilever faced criticism from Kyiv for staying in the country, leading to its inclusion in the “International Sponsors of War” list. Unilever Rus experienced a significant increase in net profit in 2022 before a decline in 2023.
The challenges faced by foreign companies exiting Russia have been further exacerbated by the regulatory environment, which imposes significant financial penalties on businesses seeking to leave. The Unilever Rus deal highlights the complexities and risks associated with operating in a politically charged environment like Russia. Companies like Unilever have had to navigate these challenges while balancing ethical considerations and their business interests. The sale of Unilever’s Russian subsidiary reflects the changing dynamics of foreign businesses operating in Russia amidst geopolitical tensions and regulatory changes.
The decision by Moscow to approve the sale of Unilever’s Russian subsidiary at a discounted price raises questions about the future of foreign investment in Russia. The regulatory hurdles and political considerations surrounding business exits in Russia underscore the challenges faced by multinational corporations operating in the country. The implications of these developments for the broader Russian economy and investment climate remain uncertain. The Unilever Rus deal sheds light on the intricate relationships between foreign companies, the Russian state, and geopolitical dynamics that shape business decisions in the country.
The sale of Unilever Rus represents a strategic move by the company to navigate the complex landscape of doing business in Russia amidst geopolitical tensions. The decision to sell its Russian subsidiary at a discounted price reflects Unilever’s efforts to mitigate risks and adapt to the evolving regulatory environment in the country. The sale process and the involvement of Russian authorities highlight the delicate balance that foreign companies must maintain in order to operate in Russia effectively. As Russia continues to face international scrutiny and pressure, the Unilever Rus deal serves as a case study in the challenges and opportunities facing foreign businesses in the country.
