It was the latest move by Russia against western firms in response to a barrage of sanctions over its war against Ukraine, now in its fifth year.
Most Western companies quickly sold their Russian operations and holdings after the Ukraine invasion, or at least isolated them, as sanctions have made trading in most goods difficult.
Others remained, citing concerns for their employees or citizens’ wellbeing, but often sharply scaled back their operations.
Russia has since made it difficult for firms to leave, requiring presidential authorisation for deals, or seizing assets outright.
Assets at risk
Nestle said it was “committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of all stakeholders, particularly its employees”.
“The company is assessing the situation and its options,” it added.
Nestle has six factories in Russia and employs around 7000 people, mainly for coffee, pet care, infant nutrition and confectionery products, a spokesperson said.
Jean-Philippe Bertschy of Swiss investment bank Vontobel said he expected the financial impact to Nestle would be small “given Russia’s limited contribution to group sales”.
He said Russia accounted for just over 1% of the group’s sales, down from around 2% before the Ukraine war.
It has suspended “the vast majority of sales, non-essential imports, advertising and capital investment”, he said, while continuing to supply essential food items.
“This practice has historically often been a precursor to a forced sale or effective expropriation of operations in the market,” said analysts at the brokerage Jeffries.
“This was the case already for Danone and Carlsberg for example in 2023,” they wrote, estimating that a write-off of Nestle’s Russia business, including money it had not been able to repatriate, could cost the Swiss firm around one billion francs ($2.1b).
Nestle shares dropped 2.6% on the Zurich stock exchange on Friday (local time).
Auchan and Leroy Merlin are controlled by France’s Mulliez family, which also owns the Decathlon sports retailer.
Auchan’s Russian subsidiary said Friday that it had requested “clarifications” from the authorities over Putin’s decree.
The French foreign and economy ministries said late Friday that France “condemns” the move, and urged Moscow to go back on its decision.
Auchan’s subsidiary is one of Russia’s main retailers, with 241 stores in the country, including 62 hypermarkets, and more than 33,000 employees according to its website.
“Once the corresponding information has been received, we will be able to provide more detailed comments,” Auchan Retail Russia told Russian news agencies.
The latest seizure echoes a string of forced asset transfers, including Moscow’s 2023 takeover of Danone’s Russian business, which was later sold to a nephew of Chechen leader Ramzan Kadyrov.
– AFP