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Russian President Vladimir Putin gives a speech during an event to mark the 1160th anniversary of Russia's statehood in Veliky Novgorod on September 21, 2022. (Photo by Ilya PITALEV / SPUTNIK / AFP) (Photo by ILYA PITALEV/SPUTNIK/AFP via Getty Images)

Russia Nationalizes Danish and French Assets in Fresh Order

In a recent move, Russia has assumed control of the Russian subsidiaries of yogurt maker Danone and beer company Carlsberg.

Under a new order signed by Russian President Vladimir Putin, the units have been placed under “temporary management” by the state. This action follows Moscow’s implementation of rules earlier this year that enable the seizure of assets belonging to companies from “unfriendly” countries.

The decision to seize the subsidiaries comes after many companies halted their operations in Russia in response to the country’s invasion of Ukraine.

The order issued on Sunday places the shares of Danone Russia and Carlsberg-owned Baltika Breweries under the control of the Russian property agency Rosimushchestvo. Danone, headquartered in France, initiated the process of selling its Russian business in October of the previous year and stated that it is currently investigating the situation while preparing to take necessary measures to protect its rights as a shareholder and ensure business continuity.

Carlsberg, a Danish brewer, confirmed that it has not received any official information from the Russian authorities regarding the presidential decree and its implications for Baltika Breweries. The company had undertaken significant efforts to separate the Russian unit from the rest of the organization and had signed an agreement to sell Baltika Breweries, although the deal had not been finalized. The prospects for the sales process are now uncertain following the presidential decree.

In April, President Putin signed an order allowing Russia to temporarily assume control of foreign assets in response to actions taken by the United States and other countries that Russia deemed “unfriendly” and contrary to international law. Additionally, the Russian units of energy companies Uniper (Germany) and Fortum (Finland) were brought under state control in April.

Danone’s Russian subsidiary is the largest dairy company in the country, employing approximately 8,000 individuals. The sale of the business was expected to result in a €1 billion ($1.1 billion; £860 million) financial impact for Danone. Baltika Breweries, a subsidiary of Carlsberg, produces well-known beer brands in Russia and employs around 8,400 people across eight plants.