Kremlin oligarchs eye Carlsberg assets as Kadyrov ally takes over Danone unit

Vladimir Putin ordered the seizure of Danone and Carlsberg’s Russian operations after businessmen close to the Kremlin expressed interest in the assets, according to people familiar with the decision.

On Tuesday, the government appointed Yakub Zakariyev, Chechnya’s agriculture minister, as head of the Danone business and Teimuraz Bolloev, a longtime friend of Putin, as director of Carlsberg’s Baltika subsidiary.

Zakreev, 34, is a close ally of the region’s powerful leader Ramzan Kadyrov, while Bolov, who previously ran Baltica in the 1990s, is reportedly close to billionaires Yuri and Mikhail Kovalchuk.

The Kovalchuk brothers, who are among Putin’s closest confidants, had previously indicated their interest in Baltika, which is based in their native St. Petersburg, according to two people familiar with the matter.

Both brothers are subject to Western sanctions, as are Kadyrov and most of his entourage.

Analysts and insiders say the seizure announced on Sunday, two days after Danone’s operations were moved, is a prelude to further distribution of foreign assets to regime loyalists. They say the Kremlin’s intention is to inflict pain on the West and reward Putin supporters with loot.

“It’s a new redistribution of wealth” in Putin’s circle, said a Russian oligarch who has known the president for decades.

Dmitry Patrushev, Russia’s agriculture minister and son of Nikolai Patrushev, Putin’s top security official, played an active role in bailing out Danone and Carlsberg, according to people familiar with the decision. Patrushev’s father met Putin when both worked for the KGB in the 1970s.

“The minister wants to put his people there to control the business,” said a person close to the Danone bidding contest.

The Kremlin’s move on the two groups shows that “no Western asset is safe in Russia anymore,” said Alexandra Prokopenko, a non-resident scholar at the Carnegie Russia Eurasia Center and former central bank official.

Moscow is now able to “take away assets from foreigners and give them to regime-friendly owners.” , , This is a sign that anything can happen. If you can do this to them, you can do it to others as well.

Danone and Carlsberg were among thousands of Western companies looking to get out of Russia after Putin’s full-scale invasion of Ukraine. Although settlement was relatively easy before, conditions have become more onerous and arbitrary.

The Kremlin requires that the companies obtain approval from a government subcommittee, sell at a 50 percent discount to market value, and contribute 10 percent of the proceeds to Russia’s budget.

In April, Putin ordered the freezing of subsidiaries of Germany’s Uniper and Finland’s Fortum. Russia has increasingly appointed executives from Rosneft, the state oil company led by Igor Sechin, a close Putin aide, to run the assets. Two months later, Putin issued a law allowing the confiscation of assets of Western companies deemed “naughty”.

Putin’s spokesman, Dmitry Peskov, said last month that companies that flout Russia’s regulations “go into the category of rogue companies”. “We say goodbye to those companies. And what we do with their property after that is our business.

The Kremlin has not explained why it seized the assets of Danone and Carlsberg. Peskov did not respond to a request for comment on this story.

“Someone has decided to get their hands on these assets,” said one person, noting that the businesses were so profitable and well-run that “any buyer could spin off the cash flow without doing anything.” “.

Danone said it is “preparing to take all necessary measures to protect our rights as a shareholder”. Carlsberg called the seizure “unexpected” and said it was seeking legal recourse.

The French yogurt maker was just days away from finalizing the sale of its Russian business, the country’s biggest dairy company, and plans to take a loss of up to €1 billion.

The group, which shortlisted three names from more than 40 potential bidders, according to two people familiar with the sale, also attracted acknowledged members of the Russian elite, including Chechen business interests linked to Kadyrov.

The warlord – who has claimed his opulent lifestyle is financed by God and once described himself as the world’s most accepted man – has developed an interest in Western food properties, according to two people advising on corporate exits from Russia.

Why food? Because its sales volume and profit margin are stable,” said one person.

In October last year, according to the BBC Russian service, Chechen businessman Valid Korchagin – close to Kadyrov’s aide Adam Delimkhanov – took a 21 percent stake in Stars Coffee, the brand of Starbucks’ former unit in Russia.

Timur Yunusov, a rapper known as Timati, who is a friend of Kadyrov and whose hit songs include “My Best Friend is President Putin”, took an equal share and became the public face of the chain.

Chechnya’s information ministry did not respond to a request for comment.

Carlsberg announced a deal last month to sell Russia’s most popular beer without naming the buyer. According to people with direct knowledge of the negotiations, the preferred bidder was Ernst, a leading manufacturer of metal packaging and aerosols in Russia.

Carlsberg declined to comment. Ernest did not respond to a request for comment.

“What a mess,” said a person familiar with the Carlsberg bidding process. “The authorities make it almost impossible (for Western companies) to leave.”

Additional reporting by Polina Ivanova in Berlin