RUSSIA – Unilever is preparing to sell its Russian business assets to local company Arnest, marking a full exit from the Russian market amid the ongoing war in Ukraine.
The deal, which includes all brands under Unilever Rus LLC, is pending official approval from the Kremlin.
According to reports, the sale may be completed at a significant discount, potentially earning Unilever up to US$500 million.
Under Russian law, foreign companies exiting the market must sell their assets at a 50% discount and pay a 10-15% exit tax.
Arnest Group, led by Alexey Sagal, has emerged as a key beneficiary of the foreign business exodus from Russia since the conflict began.
The company has capitalized on international sanctions that have restricted business opportunities for many Western companies.
The Bloomberg Billionaires Index estimates Arnest’s assets to be worth over US$1 billion. The group has made several high-profile acquisitions, including purchasing Ball Corporation’s beverage packaging operations for US$530 million, acquiring Heineken’s operations through a US$100 million debt repayment deal, and placing a US$800 million bid for Carlsberg’s brewery business.
Unilever had previously planned to remain in Russia despite the ethical concerns tied to the war, citing the importance of providing essential food and hygiene products to the Russian population.
The company employed around 3,000 people and expressed concerns that a full exit would result in the Kremlin seizing control of its assets.
“We do not think it is right to abandon our people in Russia,” Unilever stated, adding that staying in the country with strict operational restraints was the best way to prevent the Russian state from profiting from its assets.
The company had already ceased all imports and exports from Russia, halted capital flows, and contributed US$15 million in humanitarian aid to support the war effort.
Unilever’s exit is part of a broader trend of packaging and consumer goods companies leaving Russia. Finnish packaging company Huhtamaki sold its operations to Espetina for €150 million (US$165.65 million), while Mondi sold its Syktyvkar facility to Sezar Invest for approximately €775 million (~US$826 million).
Stora Enso also divested its three corrugated packaging plants in 2022, stating that local ownership would offer a more sustainable future for the businesses.
More recently, Russian President Vladimir Putin signed a decree authorizing the temporary seizure and nationalization of Silgan Holdings’ metal packaging production sites, further underscoring the challenges foreign companies face in leaving the Russian market.
Sign up to receive our email newsletters with the latest news updates and insights from Africa and the World HERE
