Summary
- Govor set to buy Finnish Huhtamaki’s Russia assets -documents
- Offers up to $151 mln for packaging firm’s assets -documents
- Deal being done via Cyprus-registered company
- To be financed by a loan from Russia’s Sberbank – source
- This content was produced in Russia where the law restricts coverage of Russian military operations in Ukraine
The owner of McDonald’s former restaurants in Russia has put in an offer of up to 151 million euros ($151 million) to take over Finnish packaging firm Huhtamaki’s (HUH1V.HE) local business, adding to his growing empire, documents seen by Reuters showed.
This deal by Siberian businessman Alexander Govor boosts his status as one of the major corporate winners to emerge from the sanctions-imposed turmoil that came after Russia invaded Ukraine.
Govor said he had paid a “symbolic” sum for McDonald’s Corp (MCD.N) restaurants in Russia when reopening under a new brand, Vkusno & tochka, which interprets as “Tasty and that’s it”, in June.
He is expected to purchase Huhtamaki’s Russian business using a loan from a Cyprus-registered company, Espentina Limited, and state lender Sberbank (SBER.MM), a source familiar with the deal said and the documents showed.
Huhtamaki and Govor did not promptly return the request for comment.
Yuri Kushnerov and Govor jointly own Espentina, according to Cyprus filings shared with Reuters. The two men also have equal stakes in an oil refinery in Russia’s central Kemerov region. Kushnerov did not promptly return a request for comment sent through a company he owns.
Govor intends to use the funds acquired from dominant state lender Sberbank, which is under Western sanctions, for the transaction, a source familiar with the deal said. The funds will be channeled to Espentina via his wholly-owned Russian firm Club Hotel, the owner of McDonald’s former restaurants.
Club Hotel and Sberbank did not promptly respond to requests for comment.
“We are prepared to proceed with the acquisition of the Finnish holding company,” an undated letter from Club Hotel Director Elena Vnuchkova said.
“Espentina will pay the price from its non-Russian account…We will be prepared to increase the proposed price to EUR 151 mln.”
Change Of Name
Operating in Russia since 1993, Huhtamaki manufactures plastic cups and paper, food containers and lids there for customers ranging from Restaurant Brands International Inc’s (QSR.TO) Burger King and Yum Brands’ (YUM.N) KFC to IKEA and Nestle (NESN.S).
Firms leaving Russia since Moscow deployed tens of thousands of troops into Ukraine on Feb. 24 have typically been close-lipped on details of the deals they clinch to exit the country.
McDonald’s, which Russian authorities said has the right to reclaim its restaurants within 15 years, did not reveal how much it had received from Govor, but said it took a charge of up to $1.4 billion after the sale.
Renault (RENA.PA) sold its majority stake in carmaker Avtovaz (AVAZI_p.MM) for allegedly only one rouble ($0.0166).
Finnish firms have been especially active in leaving the Russian market. Moscow in March pressured foreign firms that exit Russia over events in Ukraine with the nationalization of their assets, referring to Finnish companies as examples.
Huhtamaki, three of whose five biggest shareholders are Finnish pension funds, on April 14 said it would sell its businesses in Russia and was examining the market for prospective buyers. It had previously ended all investments in Russia, a market that makes up approximately 3% of the group’s total net sales and where it has four manufacturing units and hires almost 700 people.
Partner Polarcup, Huhtamaki’s subsidiary that concentrated on the Russian market, changed its name to Fiber Foodservice Russia Holdings on Aug. 25, Finnish Patent and Registration Office filings show.
Proposals from the board of Dutch-registered Huhtamaki Finance, dated Aug. 25 and seen by Reuters, indicated that Huhtamaki had carried out discussions regarding share sale and purchase agreements of issued and outstanding shares in Fiber Foodservice Russia Holdings, along with Russian entities Huhtamaki SNG and Huhtamaki Alabuga, to Espentina.
An August 20 draft copy of the agreement said that Espentina will have to make sure that Huhtamaki trademarks and names are no longer in use.
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