Renault will transfer its 68% stake in Russia’s biggest automaker Avtovaz to an automotive research institute for a symbolic rouble, Russia announced on Wednesday, in the latest example of local institutions snatching up bargains as Western companies flee.
The Commerce Ministry also said Renault’s Moscow plant, which produces cars under the Renault and Nissan brands, would be transferred to the city government, in another sign of what the Russian authorities plan to do with the Western assets. The French automaker and the French government, which owns a 15% stake in Renault, both declined to comment on the deal, which was first reported by Russian news agencies quoting Trade Minister Denis Manturov .
The Commerce Ministry says Renault will have the right to buy out its stake in Avtovaz within five to six years from NAMI, an institute founded more than a century ago behind the design and construction of Russian cars and trucks. – including the limousines used by President Vladimir Putin. The moves are likely to underscore concerns that Russian companies and institutions are grabbing the country’s most valuable assets for a bargain as Western companies scramble to comply with sanctions over the Ukraine conflict, as well as Kremlin threats that foreign-owned assets could be seized.
The Russian government is drafting legislation that could see the control of foreign companies handed over to external local management and criminalize the application of sanctions by foreign managers and companies. Renault, the Western automaker with the most exposure to Russia, said last month it would suspend operations at its Moscow plant and consider a non-cash writedown of 2.2 billion euros ($2.3 billion ) to reflect the potential costs of suspension.
Shares of Renault fell in early trading but then reversed those losses to trade up 1.1% at 0954 GMT, outperforming the French blue chip index. “Modest positive as it brings the issue closer to resolution, keeps the door open for return, although there are clearly many unknowns about when/if the Russian auto market rebounds and the geopolitical climate cools,” the authors wrote. Credit Suisse analysts.
NO GIFTS Renault decided to transfer its stake in Avtovaz, owner of the famous Lada brand, to NAMI because it did not have the capacity to maintain its operations in Russia, the Ministry of Commerce said.
The deal would be worth a single ruble and give Renault the option to buy out the stake, he said. “But if during this period we make investments, it will be taken into account with regard to the cost. There will be no freebies here,” Manturov said, as quoted by Interfax.
Moscow’s invasion of Ukraine on February 24 caused a massive exodus of businesses from Russia. More than 750 companies have announced they are reducing operations to some degree, according to the Yale School of Management. French electrical equipment maker Schneider Electric said on Wednesday it would sell its operations in Russia and Belarus to local management and had signed a letter of intent with the designated buyers.
Another high-profile example is French bank Societe Generale, which lost 3 billion euros in revenue by selling its subsidiary Rosbank to Interros Capital, an investment company linked to Russian oligarch Vladimir Potanin. There are only a few examples of foreign companies willing to take over Russian companies.
Anheuser-Busch InBev is in talks to sell its stake in its Russian and Ukrainian business to its Turkish partner, in a deal that could result in a $1.1 billion charge for the world’s biggest brewer. British energy company Shell is said to be in talks with some Chinese companies to sell its stake in a major Russian gas project. Shell declined to comment on the report.
Russia calls its actions in Ukraine a “special operation” to disarm Ukraine and protect it from fascists. Ukraine and the West say the fascist allegation is baseless and that the war is an unprovoked act of aggression. ($1 = 0.9404 euros)
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