Kremlin Orders Russia Businesses Of Nestle, Auchan Seized

The Kremlin has ordered the Russian businesses of Swiss-based food and beverage company Nestle and French retailer Auchan placed in temporary administration, procedure that previously has led to the forced sale of Western businesses to Russian owners at knockdown prices.

The local assets of the two multinationals were put under what the Kremlin says is temporary control by another company under an order issued late Thursday by Russian President Vladimir Putin.

A 2023 law allows the Kremlin to place businesses from "unfriendly countries" under temporary administration. In the case of French dairy concern Danone and Danish brewer Carlsberg, the businesses placed under administration later wound up sold to new Russian owners.

Kremlin spokesman Dmitry Peskov told reporters on Friday the companies in question are "European companies, companies from unfriendly countries" that are "most actively involved in hostilities against our country," as well as in Ukraine's strikes "on our civilian economic infrastructure." "These factors were taken into account, but so were other operational factors," Peskov said.

He stressed that "at the moment, we're talking about the introduction of external management. No other decisions have been made so far."

Nestle, based in Vevey, Switzerland, said that it "takes note" of the decree and "is assessing the situation."

It said in a statement the company "is 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."

Auchan representatives had no immediate comment.

The decree also affects affiliates of international logistics firm BATI Group, Le Monlid, which operates Russian D.I.Y. chain Lemana Pro, formerly Leroy Merlin, and French logistics group FM Logistic. All the local entities were placed under the management of a company called L.E.V. Management.

Some major Western businesses ceased operating in Russia and wrote off their businesses after the full-scale invasion of Ukraine in 2022. Since then the Kremlin has imposed burdensome conditions for disposing of local affiliates, demanding they be sold at a steep discount and subject to exit taxes and government approval. Other companies have scaled back their operations, while others continue to do business as usual.