Reuters – French food company Danone will shed control of its dairy food business in Russia in a deal that could lead to a write-off of up to 1 billion euros ($978 million), it said on Friday.
Joining a lengthening list of global companies making costly exits from Russia over the war in Ukraine, Danone will be offloading a business representing about 90% of its operations in Russia, where it will retain its infant nutrition unit.
“This is the best option to ensure long-term local business continuity,” a Danone statement said, adding that the Russian dairy unit accounted for about 5% of the group’s net sales in the first nine months of the year.
A source close to the matter said Danone could retain a stake in the dairy business, Russia’s biggest.
“The board has just started a process that will lead to a transaction that could be a full sale or a partial sale,” the source said, adding that the aim is to no longer operate the business.
Many Western food and consumer goods companies including Nestle and Procter & Gamble have continued to provide essential food and medicine to Russia while also facing pressure from consumers and activists to cut all ties with Moscow.
Shares in Danone rose more than 1% in early trading, with analysts welcoming the news and saying it could herald a wider of reshuffle of its operations.
Chief Executive Antoine de Saint-Affrique, who took the helm in September last year, said the company would part with non-performing businesses under a turnaround plan he launched this year.
“Russia is clearly an asset they had to exit from,” Pierre Tegner, analyst at broker Oddo BHF, said in a note.
