Unilever has sold its Russian operations for up to 520 million euros to the local manufacturer Arnest, after authorities in Moscow approved the deal. This step includes assets worth around 600 million euros, including activities in Belarus, as the London-listed company announced on Thursday.

We have intensively prepared the Unilever Russia business for a possible sale," CEO Hein Schumacher stated at the Capital Markets Day in Frankfurt.

Arnest, a company owned by Russian industrialist Alexei Sagal, has established itself as a significant player in recent years by acquiring Western companies like Ball Corp, Heineken, and Oriflame. These acquisitions have boosted Arnest’s revenue to around 143 million USD last year, while the core profit increased 24-fold. Particularly noteworthy is the acquisition of Russian Heineken assets for a symbolic price of 1 Euro, resulting in a loss of 300 million Euros for the brewer.

Despite the sale, Unilever was largely able to maintain its market share in Russia. The Russian operations comprised four factories and accounted for about 1 percent of the group's total sales and net profit in 2023. The move follows a wave of corporate departures from Russia after the invasion of Ukraine, with Arnest among the main beneficiaries.

The sale takes place in a challenging environment, where the Russian market is becoming increasingly unattractive for Western companies. In addition to the 50 percent price discounts imposed by the state for "unfriendly" countries, there is a 15 percent exit tax that makes the sale more difficult. Furthermore, finding local buyers who meet both Western requirements and Russian regulations is becoming increasingly difficult.

Analysts from Jefferies evaluate the sale as an important step towards risk minimization and focusing on core markets. "The settlement removes the distraction of Zantac lawsuits and allows the company to focus on the future," said an analyst. However, uncertainties remain, as 7 percent of plaintiffs may still pursue legal action.