Putin Seizes Nestlé's Russian Business by Decree
Putin Seizes Nestlé's Russian Business by Decree
The News
Russian President Vladimir Putin has ordered stakes in Nestlé's Russian companies transferred to temporary external administration, stripping the Swiss food giant of control of its business there.
The presidential decree also placed the local businesses of French retailers Auchan and Leroy Merlin under temporary external administration, according to the Wall Street Journal.
Nestlé said on Friday that it is assessing its options, Reuters reported.
The same morning, India's food regulator said it had initiated legal action against Nestlé India over three of the company's products — a second regulatory blow in a single day.
Timeline
Putin orders stakes in local companies owned by Nestlé SA transferred to temporary administration, Bloomberg reports.
The decree is reported to also cover the Russian operations of French retailers Auchan and Leroy Merlin.
India's food regulator says it has initiated legal action against Nestlé India tied to three products sold by the company, amid a series of food-safety crackdowns in India.
Nestlé publicly responds to the Kremlin's move, saying it is assessing its options for the Russian unit.
Reactions
Nestlé's response has been deliberately narrow: the company said it is assessing its options after the Kremlin's decision to put its Russian business under external administration, according to Reuters.
The Kremlin acted by presidential decree rather than through a court, the standard mechanism Moscow has used to take temporary control of foreign-owned operations.
India's food safety regulator framed its action as part of a broader series of regulatory crackdowns tied to food safety, Reuters reported.
What's Next
Nestlé has to decide what to do with a Russian business it no longer controls — sell, write down, or wait out the administration. The company has not said which way it is leaning.
Auchan and Leroy Merlin face the same question under the same decree.
In India, the legal action against Nestlé India centers on three products; the regulator has not said how far the case will go.
More
Nestlé is one of the largest Western consumer companies still operating in Russia, and its brands include KitKat. Auchan and Leroy Merlin are among the biggest French retail names that stayed in the Russian market.
Poll
What should Nestlé do with its Russian business now?
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