FINLAND – Finnish manufacturer of dairy products Valio is set to sell its Russian operations to Velkom Group as part of plans to fully exit the Russian market.
In a statement, the company revealed that it has completed negotiations on the divestment of its Russian operations and the sale to Velkom will take place immediately.
The transaction for an undisclosed amount includes Valio’s Russian operations, the processed cheese factory in Ershovo, and the Viola® brand processed cheese which is sold and produced in Russia.
The Valio brand will still be seen on store shelves in Russia until the packaging materials have been depleted and product expiration dates have been reached.
Under the agreement, the buyer must stop using the brands sold in Russia that are not included in the transaction by the end of the year.
Some of the brand rights not included in the deal include the Valio Viola® fresh cheeses which are produced by Valio in Finland.
In 2020, Valio’s net sales in Russia were 87 million euros and accounted for approximately 5 percent of Valio’s global net sales of about 1.8 billion euros.
Valio decided in March this year to withdraw from operations in Russia following the country’s invasion of Ukraine.
“Russia’s attack on Ukraine made it impossible to continue our operations in Russia, both ethically and from a business perspective,” says Valio CEO Annikka Hurme.
Hurme however noted that exiting the market proved difficult in this situation because of the constantly changing legislation and the reciprocal sanctions.
“We have sought out solutions and a suitable buyer throughout spring. With the transaction, we will complete this process and our operations in Russia will end,” he added.
Valio joins a list of other European food companies that have completely exited from their operations in Russia.
Earlier in April, Belgium-based world’s largest beer manufacturer AB InBev announced that it was selling its Russia business to its Joint Venture partner Anadolu Efes.
Carlsberg, the Western brewer most exposed to the Russian market, recently revealed that it expects its decision to sell its business to result in a writedown of about 9.5 billion Danish crowns ($1.39 billion).
Valio’s peer Danone also recently said that it was exploring all options for its Russian business including a potential sale.
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