The threat of expropriation, together with the hope of finding a buyer, determines the speed of the move
The multinationals have few good options when it comes to Russia. President Vladimir Putin’s invasion of Ukraine and the resulting sanctions have given many Western companies financial, legal and moral reasons to leave. The threat of expropriation, coupled with the hope of finding a foreign buyer, will determine how quickly the remaining ones move out.
The rush to leave does not stop. McDonald’s said on Monday it had begun a process to sell its Russian stores that would end the $181 billion burger chain’s presence in Russia. Renault sells its majority stake in the automaker Avtovaz to a local scientific institute. They follow in the footsteps of cosmetics group L’Oréal, which risked a consumer boycott in other markets if it continues to make money in Russia. The ban on importing Western-made microchips also gave tech companies like Apple little choice but to find a way out.
The problem with selling in a hurry is that the buyers are often pro-Kremlin oligarchs, such as Vladimir Potanin, who bought the Russian operations of French bank Société Générale for a nominal sum. One of the reasons consumer groups like Nestlé and Unilever remain in Russia is that leaving would mean handing over their assets to the Putin regime.
Waiting could bring out a wider range of buyers. For example, India has encouraged its state-owned energy companies to consider buying Russian assets. That could provide an outlet for Western oil giants like Shell and BP, which are eroding their combined assets by as much as $30 billion. Brewing giant Anheuser-Busch InBev has sold its Russian joint venture to its Turkish partner Anadolu Efes. Footwear chain FLO, another Turkish firm, is in talks to buy some of Reebok’s stores.
Some are trying to leave the door ajar: the sale of Renault’s Russian business, which Reuters said was for a token ruble, comes with a six-year buyback option. But for companies like the Italian bank UniCredit, which is still exploring possible options for its operations in the country, the delay increases the risk of expropriation by the state.
Lawmaker Vyacheslav Volodin recently said that Russia should confiscate the assets of unfriendly countries. Multinationals still planning their exit, such as brewers Carlsberg and Heineken, could take the hint. There are many ways for a company to leave Russia, but they are all bad.
