The issue of selling Danone's Russian assets to local investors has been resolved
Source: vedomosti.ru
Vamin Tatarstan and Deputy Prime Minister of Chechnya Yakub Zakriev can become buyers on a parity basis.
An agreement on the sale of Health & Nutrition (formerly Danone Russia, a former division of the French corporation Danone) to Russian investors has been reached, a source close to the company told Vedomosti. He confirmed that the producer of finished dairy products Vamin Tatarstan and Deputy Chairman of the Government of Chechnya, nephew of the head of the republic Ramzan Kadyrov Yakub Zakriev, who headed Health & Nutrition from July 2023 to March 13, 2024, when the company was under the temporary management of the Federal Property Management Agency by decree of President Vladimir Putin, are interested in the asset.
Buyers are going to pay for the asset in equal shares, i.e. 50% to 50%, the source added. The issue, according to him, has already been resolved. But "on paper, i.e. officially, the company is unlikely to be divided in half," he noted.
The fact that Vamin Tatarstan and Zakriev are interested in Danone's assets in Russia is known to a Vedomosti source close to the Russian government and an interlocutor in a financial company. The latter also said that the French side was forced to seriously concede to buyers in the value of the asset.
Representatives of the French Danone and Health & Nutrition declined to comment. A representative of Vamin Tatarstan stated that "there is no official information" and the company does not comment. The press services of the Chechen government and the Russian Ministry of Agriculture, which must approve the deal, did not respond to requests.
Earlier in February 2024, the Financial Times (FT) reported on the possible sale of Russian assets to Danone with reference to a letter to Russian Minister of Agriculture Dmitry Patrushev from the director of two newly created subsidiaries of Vamin Tatarstan (Vamin R and Vamin Snab) Ayrat Mukhamadeev. He, according to the FT, wrote that the "daughter" agreed to pay 17.7 billion rubles ($191.5 million) for control of the Russian business of Danone. 7.7 billion rubles of this amount will be used to service the debt of the Russian division, and the rest will be used to pay for Danone's share in the company.
The fair value of the asset, excluding the brand portfolio, is at least 60 billion rubles, and with brands – about 80 billion rubles, according to Mikhail Burmistrov, CEO of Infoline Analytics. Unicorn Chairman Sergey Moiseev is also inclined to estimate 80 billion rubles, explaining that this is a large asset that allows you to immediately take a large share of the market for dairy products and baby food. At the same time, it is obvious that the assessment for the Health & Nutrition transaction took into account the current realities, in which the sale should be carried out with at least a 50% discount, mandatory for assets of outgoing foreign companies, adds Mikhail Burmistrov. The amount of 17.7 billion rubles is 3-3.5 times less than the fair value, i.e. a "super profitable deal" for the buyer, he notes.
At the same time, the real information about the new owner of such acquired assets is not always public, says Vladimir Khantimirov, managing partner of the Asterisk Law Firm. In his opinion, in the case of Danone, there is no obvious point in hiding the new owners, but you can, for example, use the structure of a joint-stock company and then only the selected registrar will know the real shareholders.
More than 100,000 employees are employed at 17 plants of the Danone Group in Russia. The company produces and sells dairy and vegetable products, as well as water and baby food. Danone brands include Danissimo, Prostokvashino, Aktibio, Actimuno, Bio Balance, Rastishka, Tema, etc.
Health & Nutrition products occupy the 2nd place in the Russian market in the category "dairy products" in monetary terms with a share of 9.2% in 2022 and 8.5% in 2023, as well as the 3rd place in the market in the category "baby food" in monetary terms with a share of 15.2% in 2022 and 14.7% in 2023, according to the "Rating of FMCG brands NTECH-500 2023". In 2022, the French Danone transferred the Russian business to the management of local top managers and suspended all investments. Against this background, the company's net profit fell from 8.8 billion to 5.6 billion rubles. with revenue growth from 85.1 billion to 92.9 billion rubles.
The assets of Danone Russia were transferred to the temporary management of the Federal Property Management Agency on July 16, 2023. At that time, 83,000 and 85,000 ordinary shares of Danone Russia, owned by Produits Laitiers Frais Est Europe and Danone Trade, were transferred to the agency. On July 18, Zakriev was appointed CEO of Danone Russia.
In response to the actions of the Russian side, Danone announced that it would take all necessary measures to protect its rights as a shareholder of Danone Russia and ensure business continuity in the interests of all interested parties. In July 2023, Danone deconsolidated its dairy and vegetable food divisions in Russia, writing off about 200 million euros, according to the company's report for the first half of the year. On March 13, 2024, Putin canceled the transfer of Danone's Russian assets to the temporary management of the Federal Property Management Agency. This decision is "related to expediency," Dmitry Peskov, the president's press secretary, explained later.
Buyers are going to pay for the asset in equal shares, i.e. 50% to 50%, the source added. The issue, according to him, has already been resolved. But "on paper, i.e. officially, the company is unlikely to be divided in half," he noted.
The fact that Vamin Tatarstan and Zakriev are interested in Danone's assets in Russia is known to a Vedomosti source close to the Russian government and an interlocutor in a financial company. The latter also said that the French side was forced to seriously concede to buyers in the value of the asset.
Representatives of the French Danone and Health & Nutrition declined to comment. A representative of Vamin Tatarstan stated that "there is no official information" and the company does not comment. The press services of the Chechen government and the Russian Ministry of Agriculture, which must approve the deal, did not respond to requests.
Earlier in February 2024, the Financial Times (FT) reported on the possible sale of Russian assets to Danone with reference to a letter to Russian Minister of Agriculture Dmitry Patrushev from the director of two newly created subsidiaries of Vamin Tatarstan (Vamin R and Vamin Snab) Ayrat Mukhamadeev. He, according to the FT, wrote that the "daughter" agreed to pay 17.7 billion rubles ($191.5 million) for control of the Russian business of Danone. 7.7 billion rubles of this amount will be used to service the debt of the Russian division, and the rest will be used to pay for Danone's share in the company.
The fair value of the asset, excluding the brand portfolio, is at least 60 billion rubles, and with brands – about 80 billion rubles, according to Mikhail Burmistrov, CEO of Infoline Analytics. Unicorn Chairman Sergey Moiseev is also inclined to estimate 80 billion rubles, explaining that this is a large asset that allows you to immediately take a large share of the market for dairy products and baby food. At the same time, it is obvious that the assessment for the Health & Nutrition transaction took into account the current realities, in which the sale should be carried out with at least a 50% discount, mandatory for assets of outgoing foreign companies, adds Mikhail Burmistrov. The amount of 17.7 billion rubles is 3-3.5 times less than the fair value, i.e. a "super profitable deal" for the buyer, he notes.
At the same time, the real information about the new owner of such acquired assets is not always public, says Vladimir Khantimirov, managing partner of the Asterisk Law Firm. In his opinion, in the case of Danone, there is no obvious point in hiding the new owners, but you can, for example, use the structure of a joint-stock company and then only the selected registrar will know the real shareholders.
More than 100,000 employees are employed at 17 plants of the Danone Group in Russia. The company produces and sells dairy and vegetable products, as well as water and baby food. Danone brands include Danissimo, Prostokvashino, Aktibio, Actimuno, Bio Balance, Rastishka, Tema, etc.
Health & Nutrition products occupy the 2nd place in the Russian market in the category "dairy products" in monetary terms with a share of 9.2% in 2022 and 8.5% in 2023, as well as the 3rd place in the market in the category "baby food" in monetary terms with a share of 15.2% in 2022 and 14.7% in 2023, according to the "Rating of FMCG brands NTECH-500 2023". In 2022, the French Danone transferred the Russian business to the management of local top managers and suspended all investments. Against this background, the company's net profit fell from 8.8 billion to 5.6 billion rubles. with revenue growth from 85.1 billion to 92.9 billion rubles.
The assets of Danone Russia were transferred to the temporary management of the Federal Property Management Agency on July 16, 2023. At that time, 83,000 and 85,000 ordinary shares of Danone Russia, owned by Produits Laitiers Frais Est Europe and Danone Trade, were transferred to the agency. On July 18, Zakriev was appointed CEO of Danone Russia.
In response to the actions of the Russian side, Danone announced that it would take all necessary measures to protect its rights as a shareholder of Danone Russia and ensure business continuity in the interests of all interested parties. In July 2023, Danone deconsolidated its dairy and vegetable food divisions in Russia, writing off about 200 million euros, according to the company's report for the first half of the year. On March 13, 2024, Putin canceled the transfer of Danone's Russian assets to the temporary management of the Federal Property Management Agency. This decision is "related to expediency," Dmitry Peskov, the president's press secretary, explained later.
