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Arla quits Russia, selling business to management

The Danish firm announced it was suspending its business in Russia in early March.

By Andy Coyne

Dairy major Arla Foods has sold its business in Russia in response to the country’s invasion of Ukraine.

The Lurpak butter and Castello cheese brands owner has sold the operation to the family of local management who will continue to run the business with the current workforce.

Arla announced it was suspending its business in Russia in early March, CEO Peder Tuborgh saying at the time it was focused on how to support its 70 employees there.

In a statement issued today (18 May), Arla said: “We took swift action when Russia invaded Ukraine, immediately stopping our exports to Russia, which was much reduced by the embargo put in place in 2014, and initiated the sale of our local operations.

“The sale has been agreed upon in a binding share transfer agreement which is subject to a number of formal conditions, including registration of the share transfer by Russian authorities as a final step.”

Tuborgh added: “We are pleased that we have been able to agree on a sale of our Russian business to family of the local management. We continue to provide humanitarian support to Ukraine with food aid, following an earlier monetary donation through the Red Cross.

“The impact and consequences of Russia’s invasion of Ukraine are tragic and we continue to hope that a peaceful solution can be found quickly and our thoughts continue to be with the people directly and indirectly affected.”

Terms and conditions of the sale were not disclosed but Danish newspaper Børsen claims the deal was done for the sum of EUR1.00 (US$1.05).

It quoted Tuborgh as saying: “We have written off everything in Russia. In particular, it was warehouses. My reflexes were quite evident from the start. We wanted nothing to do with Russia.”

The Russian market had previously been important to Arla. It reportedly experienced an annual growth rate of 65-85% prior to the embargo Russia put in place on food imports in 2014 after western sanctions were issued against the country after its invasion of Crimea.

For more on Just Food’s coverage on how the conflict is affecting the food industry, please visit our dedicated microsite.

Just Food parent GlobalData is providing an ongoing analysis of the war’s impact across business sectors.

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