The recent acquisition of Danone’s Russia business by Vamin Tatarstan has sent shockwaves through the dairy industry, with the Russian company set to take over for a sum of 17.7 billion roubles. This move comes after Russian authorities seized control of the business, leading to a substantial write-down by Danone. But what does this acquisition mean for the future of dairy assets in Russia? Let’s take a closer look at the details and implications of this significant development.
The Acquisition Deal
Vamin Tatarstan’s acquisition of Danone’s Russia business has been a hot topic in the industry, with the Russian company paying 17.7 billion roubles for the deal. While Danone will receive 10 billion roubles for its equity, the remaining sum will be used to service debt within the Russian unit. This acquisition comes after Russian authorities seized control of Danone’s assets, leading to a write-down of approximately €700 million on its Russian operations.
The Impact on Danone
Following the seizure by Russian authorities, Danone lost management control of its business in Russia, leading to the full deconsolidation of its EDP Russia entities from July 2023. Despite remaining the legal owner of the assets, Danone has faced uncertainty and volatility in the situation, making it unable to comment further on the matter. The company had earlier warned of potential write-offs of up to €1 billion in the event of a unit sale.
Dairy Assets in Russia
With the government agency appointed as an intermediate shareholder of Danone assets, there are still possibilities for the sale to go through. A source within the Russian dairy industry mentioned to a local publication that the sale could happen entirely to a specialized player like Vamin or in parts. If the deal is approved by the Russian Agricultural Ministry, Vamin will gain access to one of the best dairy assets in the country, complete with high-quality equipment, brands, and a professional team.
Transaction Details
Ayrat Mukhamadeev, the director of the newly-created company owned by Vamin Tatarstan, revealed that the price of the transaction represented a 56% discount to the business’s market value as per an independent appraisal. Moscow has been demanding at least a 50% discount on all foreign deals, with consultants selected by the Russian government valuing the business. To ensure the continuity of its former Russian business, Danone has agreed to provide support until the end of July next year, maintaining the high quality of products for Russian consumers.
With this acquisition highlighting the changing landscape of the dairy industry in Russia, it will be interesting to see how Vamin Tatarstan navigates the future of Danone’s former assets in the country. The implications of this deal go beyond just the companies involved, affecting the entire dairy ecosystem in Russia and potentially setting the tone for future acquisitions in the industry.
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Overall, the acquisition of Danone’s Russia business by Vamin Tatarstan marks a significant shift in the dairy industry landscape. With implications for both companies and the broader industry in Russia, this deal is a clear example of the changing dynamics in the market. As we wait to see how this acquisition unfolds, one thing is certain – the dairy industry in Russia is in for an interesting ride in the coming months.
