Russian President Vladimir Putin issued a decree on Thursday to transfer the assets of Swiss food giant Nestlé and three French groups, including Auchan and the former Leroy Merlin DIY chain (now Lemana Pro), to a company called LEV Management. This move is part of Russia's increasing intervention in foreign-owned businesses since its full-scale invasion of Ukraine in 2022 and subsequent international sanctions. Many Western companies sold or isolated their Russian operations after the invasion, but the Kremlin has made it challenging for firms to exit the country, often requiring significant discounts and special exit taxes.
Nestlé, the maker of Nescafe coffee and KitKat chocolates, stated it is assessing the situation and its options, committed to protecting its rights and ensuring business continuity for stakeholders. While ownership of the subsidiaries remains with Nestlé, the decree removes its ability to manage or make decisions regarding these assets. Prior to the war, Russia accounted for about 2% of Nestlé's global sales, roughly 2 billion Swiss francs ($2.5 billion) annually. This has since decreased to just over 1% of sales. The company had already scaled back its operations by suspending the majority of sales, non-essential imports, advertising, and capital investment, focusing on essential food items. Nestlé operates six plants in Russia and employs around 7,000 staff there.
French retailer Auchan, which opened its first store in Russia in 2002 and now operates 230 supermarkets and hypermarkets, also had its assets transferred. The decree also affected the Russian subsidiaries of French logistics group FM Logistic. This action represents the largest seizure of foreign corporate assets by the Kremlin since at least 2024, highlighting the increasingly difficult business environment for international companies in Russia. The temporary management mechanism, established in 2023, allows the state to seize control of holdings from countries deemed "unfriendly." Past seizures have included local units of companies like Fortum Oyj, Danone SA, and Carlsberg A/S. LEV Management, the company tasked with temporary administration, was registered in Moscow in 2024 with a charter capital of just 15,000 rubles ($177) and one employee.
