Nervous staff and no bankers: Western companies struggle to leave Russia

Companies have struggled with how to exit in a way that limits the financial impact, does not put employees at risk and, in some cases, provides the option to return in the future.

Finnish cafe boss Rolf Ladau was one of the first to sign up.

When Western governments began imposing sanctions on Russia after its invasion of Ukraine in late February, Paulig’s CEO realized the coffee roasting business was no longer viable.

The coffee was not on the sanctions lists, but getting beans to Russia was nearly impossible as freight companies stopped shipping to and from the country. Paying in rubles was becoming more and more difficult.

Two weeks into the dispute, Ladau decided that Paulig would leave, and two months later he did what usually takes up to a year – find a suitable buyer and make a deal. In May, Paulig sold its Russian operations to Indian private investor Vikas Soi.

More than a thousand Western companies have joined a corporate exodus from Russia – unprecedented in its scale and speed – as they scramble to comply with sanctions and amid threats of retaliation from the Kremlin.

But Paulig is one of the few to have sold assets or handed over the keys to local managers. A Reuters tally shows fewer than 40, including McDonald’s, Societe Generale and Renault, have announced deals.

Interviews with half a dozen executives of companies who have divested assets show the complexity and uncertainty of selling quickly and at steep discounts – and why it can take a long time.

The hurdles are enormous: Confusion swirled over what the Kremlin would allow foreign companies to do; staff nervous after threats of government retaliation; the sanctions have limited the pool of buyers and there is little time to verify them; selling prices have been greatly reduced; and negotiations are being done virtually because fears of reprisals make it too risky to travel to Russia in person.

As Moscow prepares a new law that should come into force soon allowing it to take control of local affairs from Western companies that decide to leave, the stakes are higher and higher.

“If you haven’t started the process yet or if you still have doubts about it, it will become more difficult,” Ladau told Reuters, speaking ahead of Putin’s intervention on the oil and gas project. of Sakhalin.

“Russia has no interest in letting foreign companies easily exit the market.”


Many Western companies have encountered problems trying to leave.

Burger King halted business support at its outlets in Russia in March, but the fast food chain’s roughly 800 restaurants are still open. Lawyers say part of the problem is the complexity of its joint venture-style franchise agreement.

UniCredit sold some assets via swaps but had to widen the search for potential buyers to countries like India, Turkey and China.

Four months later, there are few signs that the companies have come up with a plan to pull through.

Renault sold its share of a lucrative joint venture to the Russian state for one rouble; McDonald’s sold 800 branches to a Siberian businessman for a symbolic sum; both agreed to buyout clauses.

SocGen has sold its Rosbank unit to Interros Capital, a company linked to Russian oligarch Vladimir Potanin.

Many have given the keys to local officials. Almost all recorded heavy write-downs totaling tens of billions of dollars.

Ladau has spoken out against a buyout clause.

“The moral and ethical issues are so serious that we don’t have the option of returning to Russia,” he said.

Experts say it will be difficult for new owners in an increasingly isolated Russia without access to Western products. The cost of everything from food to energy is skyrocketing and the economy has plunged into recession.

Still, the departures have provided an unexpected boon to businesses and entrepreneurs in Russia and countries outside of sanctions, as they grab valuable assets for a bargain.


One aspect of the exodus highlights its unusual nature: the absence of bankers who would normally play a key role in transactions.

Sources say the banks stayed away due to concerns over sanctions breaches.

Instead, companies rely on lawyers in Russia and international consultants with knowledge of the country to find and vet suitors – making sure they’re legitimate, not on sanctions lists. and that they have the financial references.

Private Finnish food company Fazer signed a deal as early as April, selling its Russian bakery business to Moscow-based rival Kolomenskij Bakery and Confectionery Holding.

Speed ​​belies complications.

At first, Russia threatened to ban the exits of listed foreign companies. When the company asked for clarification, its local legal advisers said it may have been a mistake.

The rules can change at any time.

“So everyone was in a terrible rush,” said Sebastian Jagerhorn, head of legal and compliance.

Lara Saulo, who runs the bakery business, said even advisers in Russia gave conflicting advice along the way.

Putin’s raid on Sakhalin on Thursday was clearer.

“Soon they will fight back, not just with gas, but with other means,” said a senior executive whose company is struggling to emerge.

(Reporting by Essi Lehto and Anne Kauranen in Helsinki; Additional reporting by Valentina Za in Milan; Writing by Josephine Mason; Editing by Mark Potter)

By Essi Lehto and Anne Kauranen

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