Nervous staff, not bankers: Western companies are struggling to leave Russia

Companies have struggled with how to go about it in a way that mitigates financial consequences, does not endanger employees and in some cases allows them to return in the future.

The Finnish coffee manager Rolf Ladau was one of the early pioneers.

When Western governments began imposing sanctions on Russia following the invasion of Ukraine in late February, Paulig’s CEO realized that the coffee roastery was no longer viable.

Coffee was not on the sanctions lists, but getting beans into Russia was almost impossible because freight companies stopped shipping to and from the country. It became more and more difficult to pay in rubles.

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

More than a thousand Western companies have joined a relocation of companies from Russia – unprecedented in size and speed – as they struggle to comply with sanctions and under threat of retaliation by the Kremlin.

But Paulig is one of a relatively small number who have sold assets or handed over the keys to local leaders. According to a Reuters poll, fewer than 40 companies, including McDonald’s, Société Générale and Renault, have announced deals.

Interviews with a dozen executives of companies divesting assets reveal how complicated and uncertain it is to sell quickly and at a deep discount – and why it can take so long for many.

The obstacles are enormous: there has been confusion over what the Kremlin would allow foreign companies to do; staff are nervous about the government’s threats of retaliation; the sanctions have limited the number of buyers and there is little time to control them; sales prices have been sharply reduced; and the negotiations are being conducted almost because, for fear of reprisals, it is too risky to visit Russia in person.

While Moscow is preparing a new law that is expected to enter into force soon, which will allow it to take control of local businesses in Western companies that decide to leave, efforts are stepping up.

“If you have not started the process, or if you are still in doubt about it, then it will be more difficult,” Ladau told Reuters, who spoke ahead of Putin’s battle over the oil and gas project in Sakhalin.

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


Many Western companies have encountered difficulties in trying to quit.

Burger King reduced business support to its Russian branches in March, but the fast food chain’s around 800 restaurants are still open. Lawyers say part of the problem is the complexity of his joint venture-style franchise deal.

UniCredit has sold some assets through swaps, but has had to expand its search for potential buyers to countries such as India, Turkey and China.

After four months, there is little evidence that companies have found a plan to go free.

Renault sold its stake in a lucrative joint venture to the Russian state for one ruble; McDonald’s handed over 800 branches to a Siberian businessman for a token sum; both have agreed buyback clauses.

SocGen sold its Rosbank division to Interros Capital, a company affiliated with Russian oligarch Vladimir Potanin.

Many have given the keys to local leaders. Almost all of them have posted large depreciations totaling tens of thousands of billions of dollars.

Ladau has decided to waive a buy-back clause.

“The moral and ethical issues are so serious that we have no room to return to Russia,” he said.

Experts say it will be difficult for new owners in an increasingly isolated Russia without access to Western goods. Expenditure on everything from food to energy is skyrocketing and the economy is thrown into recession.

Yet the outgoing companies and entrepreneurs in Russia and countries outside the sanctions have provided an unexpected windfall as they have snatched valuable assets at cheap prices.


One aspect of emigration highlights its unusual character: the absence of bankers, who usually play a key role in transactions.

Sources say banks are holding back for fear of violating sanctions.

Instead, companies rely on lawyers in Russia and international consultants with knowledge of the country to find and vet graduates – to ensure they are legitimate, not sanctioned and have the necessary financial credentials.

The privately owned Finnish food company Fazer signed an agreement back in April to sell its Russian bakery to Moscow-based rival Kolomensky Bakery and Confectionery Holding.

The speed contradicts the complications.

Initially, Russia threatened to ban the exit of listed foreign companies. When the company asked for clarification, its local legal advisers said it could have been a mistake.

The rules can be changed at any time.

“So everyone was terribly busy,” said Sebastian Jagerhorn, head of legal affairs and compliance.

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

Putin’s immersion in Sakhalin on Thursday was clearer.

“Soon they will reciprocate, not just with gas, but also in other ways,” said a top executive whose company is having a hard time getting out.

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