More than a year after the start of the conflict in Ukraine, the French Leroy Merlin, giant of DIY equipment and one of the main foreign employers in Russia, announced that it wanted to cede control of all of its stores in this country, one of its biggest markets.
Adeo, the parent company of Leroy Merlin, indicated Friday "its intention to cede control" of the company, established for 18 years in Russia, its second market after France. This operation "must make it possible to preserve the jobs of the 45,000 employees and to perpetuate the activity of the company", argues in a press release the French group, owned by the Mulliez family.
The sale will be subject to the approval of the competent authorities in Russia, specifies the press release, which quotes "a work started several months ago in compliance with the applicable regulations".
In an interview with the regional daily La Voix du Nord on Friday, management said it wanted to make its stores in Russia autonomous in all respects.
"We do not know what the local authorities will tell us (...) Other companies like Danone or Schneider have made the same request for an activity control session, they have been waiting for a response for months", indicates the direction, quoted by the newspaper.
The management team in Moscow includes French people in particular, but the group did not indicate in what proportion and did not give details of the operation either.
Several brands owned by the Mulliez family remained very established in Russia, despite the invasion of Ukraine by Russian troops. The 113 Leroy Merlin stores in this country represent between 18 and 20% of the company's total turnover, she told AFP.
Adeo explained last year that it was maintaining its activity in Russia but that it was suspending all new investment, citing the risk of "expropriation" in the event of withdrawal, a threat waved by the Russian authorities.
Auchan, another commercial brand belonging to the Mulliez family galaxy, achieves more than 10% of its sales in Russia, for 230 stores, according to figures from mid-2022.
However, while many French and Western groups have withdrawn from Russia since the start of the war, the decision of the Mulliez family to stay in the country has drawn criticism.
In mid-February, the head of Ukrainian diplomacy Dmytro Kouleba thus accused Auchan of having become a "weapon in its own right of Russian aggression" after the publication of an investigation by the daily Le Monde according to which the group had contributed to Moscow's war effort, via a collection of products intended for Vladimir Putin's army in March 2022. Accusations denied by Auchan.
The choice to disengage from Russia has a cost for Western companies. The French bank Societe Generale thus separated last year from its Russian retail banking subsidiary, Rosbank. A withdrawal which had resulted in a charge of more than 3 billion euros in its accounts.
"These are always difficult cases, when the transfer operations are more suffered than desired", analyzes Guillaume Briant, associate lawyer at the firm Stephenson Harwood, specializing in mergers and acquisitions.
"In the current context, there are often losses for the seller: when all Western companies leave a country at the same time, this limits the number of potential buyers. As soon as there are time constraints, but also risks of expropriation, this does not work in favor of the sellers".
Before the war, more than 500 French companies (including 35 CAC 40 groups) operated in Russia, according to the Ministry of the Economy. Always from the same source, France was, before the invasion of Ukraine, the first foreign employer in Russia, with some 160,000 employees.
In addition to Auchan, other big names such as Bonduelle and Lactalis continue their activities there.
“For activities that are not subject to sanctions, but in the context of increasing tension, there may be an interest for a company to pre-empt an exit today, rather than having to sell urgently if new international sanctions are put in place", judge Guillaume Briant.
03/24/2023 17:51:31 - Paris (AFP) - © 2023 AFP
