Russian President Vladimir Putin signed a decree placing the local assets of Swiss food giant Nestlé and several French retail brands under temporary external administration. The move escalates pressure on Western companies remaining in the country amid the ongoing Ukraine war, now in its fifth year.
The Kremlin’s latest maneuver targets key international operations still functioning inside Russia’s borders. Alongside Nestlé, the decree impacts French retailer Auchan and Lemana Pro, the former Russian arm of French DIY retailer Leroy Merlin, according to the CNBC reporting on the presidential decree. The assets are slated for transfer to a shell company designated as L.E.V. Management.
Russian authorities defended the takeover as a preliminary step rather than a permanent liquidation. Kremlin spokesperson Dmitry Peskov told news agency RIA Novosti that right now, we’re talking specifically about introducing external management; no other decisions have been made yet, as noted in the coverage from CNBC. Putin signed a decree in 2023 giving Moscow the authority to place property belonging to people or entities from so-called “unfriendly” countries under temporary administration. The country has since taken control of local units from dozens of companies, including Danish brewer Carlsberg, French food producer Danone and Finnish utility Fortum.
Nestlé Weighs Options as Factory Operations and 7,000 Jobs Face Uncertainty
Nestlé operates six factories across Russia and employs approximately 7,000 workers, mainly for coffee, pet care, infant nutrition and confectionery products, a spokesperson said. Following the publication of the presidential decree on the country’s official legal portal on Thursday, the Swiss food manufacturer stated that it is assessing the situation and its options.
Nestlé 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
Nestlé corporate statement, via CNBC
Financial analysts note that Nestlé had already scaled back its Russian footprint significantly following the onset of the war. Jean-Philippe Bertschy of Swiss investment bank Vontobel pointed out that Russia now accounts for just over 1% of the group’s sales, down from around 2% before the Ukraine war, having suspended the vast majority of sales, non-essential imports, advertising and capital investment, while continuing to supply essential food items. Nevertheless, brokerage firm Jeffries warned that a write-off of Nestlé’s Russia business, including money it had not been able to repatriate, could cost the Swiss firm around one billion francs ($2.1b). On the Zurich stock exchange, Nestlé shares dropped 2.6% on Friday (local time). Shares of Nestlé traded 2.2% lower on Friday in other tracking.
French Retailers and Mulliez Family Holdings Targeted by Kremlin Decree
The decree also strikes heavily at French commercial interests, specifically operations controlled by France’s Mulliez family, which also owns the Decathlon sports retailer. Auchan maintains a presence in Russia through a network of 241 stores in the country, including 62 hypermarkets, and more than 33,000 employees according to its website. Auchan Retail Russia announced on Friday that it had requested clarifications from the authorities over Putin’s decree, telling Russian news agencies that once the corresponding information has been received, we will be able to provide more detailed comments. A spokesperson for Auchan was not immediately available to comment when contacted by CNBC on Friday, while Lemana Pro declined to comment.
The French foreign and economy ministries issued a response late Friday condemning the move, urging Moscow to go back on its decision. The aggressive asset transfer mirrors prior state takeovers executed under Moscow’s 2023 takeover of Danone’s Russian business, which was later sold to a nephew of Chechen leader Ramzan Kadyrov.
Sanctions Compliance, Swiss Neutrality, and the Precedent of Expropriation
Drawing comparisons to previous interventions, analysts at Jeffries noted that this practice has historically often been a precursor to a forced sale or effective expropriation of operations in the market, citing that this was the case already for Danone and Carlsberg for example in 2023. The diplomatic friction extends directly into Switzerland’s domestic politics. Although Switzerland, which is not a member of the European Union, has largely adopted the EU’s sanctions against Russia since Moscow’s full-scale invasion of Ukraine in early 2022. That alignment prompted an initiative that calls for a stricter interpretation of the country’s longstanding approach to neutrality, with Swiss voters set to decide on the proposal later this month. Russia has said it no longer views Switzerland as a neutral state and sharply criticized the country for providing humanitarian aid to Ukraine.
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