Putin Decree Places Nestlé, Auchan, Lemana Pro and FM Logistic Russian Units Under State-Appointed Management

A decree signed by Russian President Vladimir Putin and published on the country's official legal portal on Thursday placed the Russian assets of Swiss food group Nestlé, French retailer Auchan and Lemana Pro, the former Russian arm of Leroy Merlin, under temporary external administration, CNBC reported. The move, confirmed by multiple outlets including Meduza and ua.news, marks one of the highest-profile applications yet of Moscow's asset-seizure mechanism against Western consumer companies still operating in the country.

What the decree covers

According to ua.news, the list placed under administration includes 100% of Auchan LLC, Nestlé's two Russian subsidiaries Nestlé Russia and Nestlé Kuban, Le Monlid LLC, which owns the Lemana Pro chain, three companies belonging to French logistics operator FM Logistic, eight legal entities of Batilogistic, and Enzhe Stroy LLC. The Economic Times headlined the development as Russia seizing assets in the latest Western corporate takeover, though the decree itself, as reported, establishes temporary management rather than an outright transfer of title.

Complicating the Lemana Pro case, ua.news reported that 99.99% of the chain had formally been transferred to Scenari Holding LP of the United Arab Emirates at the end of 2023, while Meduza reported the decree separately covers a residual 0.007% stake in Le Monlid still held by France's Adeo group. Leroy Merlin's owner had announced a 2023 exit from Russia, with stores continuing to operate under the Lemana Pro brand, per Meduza.

A shell company as administrator

The assets were transferred to the temporary management of a company called JSC L.E.V. Management. Ua.news, citing The Bell, described the new administrator as showing signs of being a shell company: it is classified as a microenterprise with a charter capital of 15,000 rubles and had previously been advertised for sale as a legal entity with no revenue and no open bank account. CNBC likewise characterized L.E.V. as a shell company in its reporting.

CNBC described Putin's move as widely regarded as a first step toward eventually passing the assets to Kremlin-friendly investors, framing it as part of a renewed push against Western businesses that remained in Russia through the war. Ua.news noted the temporary administration mechanism has been in effect since April 2023, stripping foreign owners of control and granting the administrator the powers of an owner, as previously occurred with Danone and Baltika. Ua.news also cited an investigation by the Explainer project reporting that after Danone's de facto nationalization, control passed to Yakub Zakriev, a nephew of Chechen leader Ramzan Kadyrov, and Ruslan Alisultanov, a former Kadyrov aide.

Company and Kremlin statements

Nestlé told CNBC it had taken note of the decree and was assessing the situation, adding it is committed to taking all necessary steps to protect its rights and ensure continuity of business operations in the interests of stakeholders, particularly its employees. CNBC reported that a spokesperson for Auchan was not immediately available for comment when contacted on Friday, while Lemana Pro declined to comment.

Kremlin spokesperson Dmitry Peskov, cited by CNBC via the Russian news agency RIA Novosti, said only external management has so far been introduced and that no other decisions have been made yet. That leaves open, at least officially, whether Moscow intends further steps toward an ownership transfer; CNBC reported that the move is nonetheless widely regarded as a first step toward passing the assets to Kremlin-friendly investors.

Financial exposure and market reaction

CNBC reported that Nestlé shares traded 2.2% lower on Friday following the decree. That followed an earlier hit in August: swissinfo.ch reported that after Kommersant's report of a demand to place Nestlé units under temporary management, Nestlé's share price fell 1.6% to CHF79.70, making it the weakest blue chip in the Swiss SMI index that day.

On the scale of exposure, swissinfo.ch reported a Nestlé spokesperson's figure that Russia accounts for around 2% of the group's turnover, with six production sites in the country making coffee, confectionery, baby food and pet food. Swissinfo.ch also cited JPMorgan analysts saying in August that losing the Russian business was possible, and that a forced sale generating little in proceeds could cut earnings per share by roughly 3-4%, while adding pressure toward a full withdrawal. That figure is JPMorgan's own estimate as reported by swissinfo.ch, not a Nestlé disclosure, and should be read as an attributed analyst projection rather than a confirmed outcome.

The August pressure on Nestlé traced back to a Kommersant report, relayed by Meduza and finance.yahoo.com, that a little-known Russian logistics company, named KS Logistika by Meduza and swissinfo.ch and KM Logistics by Just Food, had asked Putin to place five Nestlé Russian legal entities under temporary management, citing a lack of capacity expansion and a halt in exports of Russian-made goods. At that time, a Nestlé spokesperson told Just Food that the Russian government had not contacted the company about the request, according to finance.yahoo.com.

Context: neither company had left Russia

Meduza's reporting underscored that neither Auchan nor Nestlé had exited Russia after the 2022 full-scale invasion of Ukraine. Nestlé scaled back operations, halting investment, stopping sales of some brands such as KitKat and Nesquik, and saying it did not plan to turn a profit in the country, per Meduza. Other Western consumer goods companies, including Barry Callebaut, L'Oréal and Beiersdorf, also remain active in Russia, according to swissinfo.ch.

CNBC noted the legal basis for Thursday's decree traces to a 2023 decree giving Moscow authority to place property of people or entities from so-called unfriendly countries under temporary administration, a power Russia has since used against local units of dozens of companies including Danish brewer Carlsberg, French food producer Danone and Finnish utility Fortum.

CNBC also placed the decree against a backdrop of strained Swiss-Russian relations: Switzerland, though not an EU member, has largely adopted the bloc's sanctions against Russia since 2022, Russia has said it no longer views Switzerland as neutral, and Swiss voters were due to decide later this month on an initiative calling for a stricter interpretation of the country's neutrality doctrine.

Bottom Line

The decree formalizes temporary external control over the Russian entities of Nestlé, Auchan, Lemana Pro and FM Logistic and hands administration to JSC L.E.V. Management, characterized as a shell company by CNBC and by ua.news citing The Bell — a step CNBC reported is widely regarded as a first move toward passing the assets to Kremlin-friendly investors rather than a final transfer of title. Peskov's statement that no other decisions have been made yet, and Nestlé's own description of the situation as being assessed, indicate the process remains unresolved. Reading the attributed figures as interpretation: with Russia accounting for around 2% of group turnover according to a Nestlé spokesperson cited by swissinfo.ch, and JPMorgan estimating in August that a forced sale generating little in proceeds could cut earnings per share by roughly 3-4%, the disclosed group-level exposure for Nestlé appears limited, even as the episode adds to a broader pattern of Western consumer and logistics companies losing control of Russian units years after the 2022 full-scale invasion.