Vladimir Putin ordered the seizure of Danone and Carlsberg’s Russian operations after businessmen close to the Kremlin expressed an interest in the assets, according to people close to the decision.
On Tuesday the government appointed Yakub Zakriev, Chechnya’s agriculture minister, as head of the Danone business and installed Teimuraz Bolloev, a longtime friend of Putin, as director of Carlsberg’s Baltika subsidiary.
Zakriev, 34, is a close ally of the region’s strongman leader Ramzan Kadyrov, while Bolloev, who previously ran Baltika in the 1990s, is reportedly close to billionaires Yuri and Mikhail Kovalchuk.
The Kovalchuk brothers, who are among Putin’s closest confidants, had previously signalled their interest in Baltika, which is based in their native St Petersburg, according to two people familiar with the matter.
Both brothers are under western sanctions, as is Kadyrov and most of his entourage.
The expropriations, announced on Sunday, followed by the transfer of Danone’s operations two days later, are a prelude to further distributions of foreign assets to regime loyalists, analysts and insiders say. The Kremlin’s intention is to inflict pain on the west and reward Putin supporters with the spoils, they say.
“It’s a new redistribution of wealth” to Putin’s circle, said a Russian oligarch who has known the president for decades.
Dmitry Patrushev, Russia’s agriculture minister and son of Putin’s top security official Nikolai Patrushev, played an active role in torpedoing Danone and Carlsberg’s exits, according to people close to the decision. Patrushev’s father met Putin when both worked for the KGB in the 1970s.
“The minister wants to place his own people in there to take control of the business,” said a person close to the Danone bidding contest.
The Kremlin’s move on the two groups shows “no western assets are safe in Russia anymore”, said Alexandra Prokopenko, a non-resident scholar at Carnegie Russia Eurasia Center and former central bank official.
Moscow is now able to “take assets away from foreigners and give them to regime-friendly owners . . . This is a signal that anything goes. If you can do it to them you can do it to others,” she added.
Danone and Carlsberg were among thousands of western companies seeking to exit Russia after Putin’s full-scale invasion of Ukraine. While disposals were at first relatively easy, the conditions have become more onerous and arbitrary.
The Kremlin requires that companies secure approval from a government subcommittee, sell at a 50 per cent discount to market value, and contribute 10 per cent of the proceeds to Russia’s budget.
In April, Putin ordered the seizure of the subsidiaries of Germany’s Uniper and Finland’s Fortum. Russia swiftly appointed executives from Rosneft, the state oil company led by Putin’s close ally Igor Sechin, to run the assets. Two months later, Putin issued legislation allowing assets of western companies deemed “naughty” to be snapped up.
Companies that fall foul of Russia’s rules “go in the category of naughty companies”, Putin’s spokesman Dmitry Peskov said last month. “We say goodbye to those companies. And what we do with their assets after that is our business.”
The Kremlin has not explained why it seized Danone and Carlsberg assets. Peskov did not respond to a request for comment for this story.
“Someone decided to take these assets into their own hands,” said one of the people, noting that the businesses were so profitable and well-run that “any buyer can just skim off the cash flow without doing anything”.
Danone said it was “preparing to take all necessary measures to protect its rights as shareholder”. Carlsberg called the expropriation “unexpected” and said it was exploring legal recourse.
The French yoghurt maker was days away from finalising the sale of its Russian business, the country’s largest dairy company, and had planned to take a loss of up to €1bn.
The group, which had shortlisted three names out of more than 40 potential bidders, also attracted sanctioned members of the Russian elite, including Chechen business interests linked to Kadyrov, according to two people familiar with the sale.
The warlord — who has claimed his opulent lifestyle is financed by God and once described himself as the world’s most sanctioned man — has developed an interest in western food assets, according to two people who advise on corporate exits from Russia.
“Why food? Because it has stable sales volumes and profit margins,” one of the people said.
In October last year, Chechen businessman Valid Korchagin — close to Kadyrov’s ally Adam Delimkhanov, according to the BBC Russian service — took 21 per cent in Stars Coffee, the brand for Starbucks’ former unit in Russia.
Timur Yunusov, a rapper known as Timati who is a Kadyrov friend and whose hits include “My Best Friend is President Putin”, took an equivalent stake and became the public face of the chain.
Chechnya’s information ministry did not respond to a request for comment.
Carlsberg announced a deal to sell Russia’s most popular beer last month, without naming the buyer. The preferred bidder was Arnest, a leading manufacturer of metal packaging and aerosols in Russia, according to people with direct knowledge of the talks.
Carlsberg declined to comment. Arnest did not respond to a request for comment.
“What a mess,” said a person close to the Carlsberg bidding process. “The authorities make it close to impossible [for western companies] to leave.”
Additional reporting by Polina Ivanova in Berlin