Russian President Vladimir Putin has signed a decree placing the Russian assets of several European retailers under temporary management by a local company, including those of Swiss food giant Nestlé.


The decree was signed on September 17 and covers Nestlé’s Russian entities, including Nestlé Kuban LLC and Nestlé Russia LLC, as well as the Russian subsidiary of two French retailers, the grocery hypermarket chain Auchan and gardening and home improvement store Leroy Merlin, Russian media outlets report.


Under the decree, 67.44% of the shares in Nestlé Kuban owned by Societe des Produits Nestlé S.A. and a further 32.56% held by Nestlé Deutschland AG have been transferred to temporary management under a private entity called "L.E.V. Management." 


The measure also covers 100% of the shares in Nestlé Russia, as well as 100% of the shares in Le Monlid LLC. The former is the legal entity of Lemana PRO, which used to be known as Leroy Merlin Vostok and is associated with the French home improvement and gardening retailer.


Kremlin spokesman Dmitry Peskov commented on the decision, stating that the move was linked in part to the fact that the owners of the companies are registered in European countries that Russia classifies as “unfriendly”.


“These are European companies, companies from unfriendly countries. And, of course, one of the factors taken into account when making this decision was that these are unfriendly countries,” Peskov said.


The affected companies have also commented on these developments, with Nestlé stating on September 18 that it had taken note of Putin’s decree and was assessing the situation and its options.


“Nestlé is committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of all stakeholders, particularly its employees,” the company said.


Auchan Retail Russia said it had requested clarification of the decree and would provide a more detailed response after receiving the relevant information, the company told Russia's TASS news agency.


Nestlé’s shares fell as much as 1.9% in early trading the next day, reaching a three-month low before partially recovering.


Nestlé has operated in Russia since the 1990s but scaled back its business following the outbreak of the Russia-Ukraine war in 2022. The company suspended some brands, halted non-essential imports and exports, and stopped advertising and capital investment in the country.


The Swiss food giant continues to operate six plants in Russia, employing more than 7,000 people, where it produces what it describes as essential and everyday food products. Russia accounts for about 2% of Nestlé’s global sales, equivalent to roughly 2 billion Swiss francs ($2.5 billion) annually.


Auchan was among the major Western consumer businesses that expanded into Russia before the war, opening its first store there in 2002. It now operates 230 super- and hypermarkets across the country.


Russia has taken control of dozens of assets belonging to international companies since 2023, when it introduced a temporary management mechanism allowing the state to seize control of holdings owned by companies from countries it considers “unfriendly”.


The assets have included Russian units of Finnish utility Fortum, French yoghurt maker Danone and Danish alcoholic beverages brewer Carlsberg.


In August of this year, Putin signed a law allowing Russian courts to prevent foreign investors that left Russia after 2022 from buying back assets they had sold, after he repeatedly warned publicly that returning to the Russian market would be difficult.


By Nazrin Sadigova