Moscow has escalated its confrontation with the West by seizing control of the Russian businesses of Swiss food giant Nestle S.A. and French supermarket chain Auchan, marking the most significant forced takeover of foreign corporate assets by the Kremlin in at least two years. A presidential decree, published late Thursday on Russia's official legal portal, ordered the transfer of the two companies' Russian equity stakes to the temporary custody of a management company identified as AO L.E.V.
The obscure firm, registered in Moscow in 2024 with a charter capital of just 15,000 rubles (approximately $177) and a single employee, had virtually no public footprint prior to this decree. The abrupt move against Nestle S.A. and Auchan underscores the deteriorating operating environment for multinationals that have chosen to remain in Russia, despite a wave of international sanctions following Moscow's 2022 full-scale military offensive in Ukraine that prompted thousands of businesses to exit.
While many large corporations, including PepsiCo, Mondelez International, and Austria's Raiffeisen Bank International, continue to operate in Russia with reduced footprints, the Kremlin's latest action signals a more aggressive phase in its asset confiscation campaign. Since amending its legal framework in 2023 to establish a temporary management mechanism, Russia has seized dozens of foreign-held assets, including those of Finnish utility Fortum, French yogurt maker Danone, and Danish brewer Carlsberg's Russian subsidiaries. Once assets are placed under temporary control, they are typically transferred to Kremlin-approved Russian buyers, often with close ties to the administration.
Assets seized from Danone and Carlsberg were briefly returned to their owners before being forced into sales to domestic Russian firms. The Kremlin has also steadily raised the barriers for foreign investors seeking to exit, requiring sellers from "unfriendly countries" to offer at least a 60% discount on transactions while paying a special exit tax. In August, President Vladimir Putin signed legislation barring foreign investors who left Russia after the 2022 offensive from repurchasing assets they had sold, and he has repeatedly signaled that re-entry into the Russian market will be extremely difficult.
The late-night decree targeting Nestle S.A. and Auchan caught the market off guard, despite local media reports in August suggesting such a possibility. It marks the first invocation of the temporary management mechanism for assets of comparable value since the Kremlin targeted the operations of the AB InBev Efes joint venture between Anheuser-Busch InBev and Turkey's Anadolu Efes in 2024. Nestle S.A., which has operated in Russia since the 1990s, scaled back its presence after 2022, suspending some brands and halting non-essential imports, exports, advertising, and capital investment. The Swiss company maintains six factories in Russia, continuing production of what it describes as essential everyday food products, and employs over 7,000 people in the country, with the Russian market contributing approximately 2% of its global sales, or around 2 billion Swiss francs ($2.5 billion) annually.
Auchan, one of the first major Western consumer companies to enter Russia, opened its first store there in 2002 and has since built an extensive network of 230 supermarkets and hypermarkets, according to its website. In a statement Friday, Nestle S.A. said it had taken note of the decree and was assessing the situation and potential responses, vowing to take all necessary measures to protect its rights, ensure business continuity, and safeguard the interests of all stakeholders, particularly its employees. An Auchan representative did not immediately respond to requests for comment late Thursday, and the company had not issued a public statement.
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