FRANCE – Danone, a French dairy giant, has received regulatory approvals for the disposal of its essential dairy and plant-based (EDP) division assets in Russia, moving closer to finalizing a deal with Russian dairy producer Vamin Tatarstan.

This transaction, expected to be completed in the coming weeks, signifies a significant step in Danone’s efforts to divest its operations in Russia amidst geopolitical tensions.

The disposal of the EDP business in Russia follows a series of developments stemming from Vladimir Putin’s invasion of Ukraine in February 2022.

Danone had suspended investments in Russia early on in the conflict and later decided to divest its EDP business, estimating associated costs to be €1 billion initially.

The disposal process began in October 2022, and in July 2023, Danone deconsolidated EDP Russia from its accounts after losing control of management.

The disposal comes with a hefty financial loss for Danone, estimated at €1.2 billion (US$1.3 billion). This loss underscores the challenges faced by multinational corporations navigating geopolitical uncertainties and market disruptions.

The disposal of Danone’s EDP business in Russia is significant, given that EDP operations accounted for 90% of Danone’s business activities in the country. The remaining 10% comprised infant formula operations through Danone’s specialized nutrition unit.

While the exact details of the disposal and the assets included in the sale to Vamin Tatarstan remain undisclosed, Danone’s decision to divest its Russian assets reflects a strategic move to mitigate risks and focus on core markets.

The completion of the transaction will mark the conclusion of a prolonged saga surrounding Danone’s presence in Russia, characterized by geopolitical tensions and regulatory challenges.

Despite facing hurdles, Danone remains committed to delivering value to its shareholders and adapting to evolving market dynamics.

Danone is expected to provide further insights into the disposal and its financial implications when it issues its first-quarter results for fiscal 2024 on April 18.

This disclosure will shed more light on the impact of the disposal on Danone’s financial performance and strategic direction moving forward.

Despite the challenges posed by the disposal of its Russian assets, Danone reported a 7% increase in 2023 sales revenue to €27.62 billion on a like-for-like basis.

However, net income experienced an 8.1% decline to €881 million, primarily attributable to the negative scope effect resulting from the deconsolidation of the EDP business in Russia.

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