McDonald's starts process to exit Russia after 3 decades
Fast-food chain looking to sell all its restaurants there to a local buyer but will retain the trademark
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BANGALORE • McDonald's said yesterday that it has started a process to sell all its restaurants in Russia, exiting the country after more than 30 years following its invasion of Ukraine.
The world's largest fast-food chain had in March decided to close its 847 restaurants in Russia, taking a hit of US$50 million (S$69.7 million) a month. It now expects to record a non-cash charge of about US$1.2 billion to US$1.4 billion following the sale.
The decision to sell its Russia assets, including the iconic Pushkin Square location in central Moscow, marks a major retreat by an iconic Western brand.
Once a symbol of flourishing American capitalism in the dying embers of the Soviet Union, the store at Pushkin Square was the first to be opened in the country in 1990. More than 5,000 people had attended the opening.
McDonald's said it was looking to sell all its restaurants in Russia to a local buyer, but will continue to retain the trademark.
"The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald's to conclude that continued ownership of the business in Russia is no longer tenable," McDonald's said.
The company said it would ensure that its 62,000 employees in Russia continue to be paid until the close of any transaction and that they have future jobs with any potential buyer.
A slew of other Western companies have agreed to sell their Russian assets or hand them over to local managers.
Renault agreed yesterday to transfer its €2.2 billion (S$3.2 billion) Russian business to state entities for a symbolic sum in what amounts to a nationalisation.
The French carmaker's majority stake in carmaker AvtoVaz - maker of the top-selling Lada brand - will go to a Russian state-run automobile research institute known as the Central Research and Development Automobile and Engine Institute, or Nami, while the Moscow city government will take over an assembly plant near the Russian capital.
The automaker has the option to buy back its stake in AvtoVaz within the next six years. While a spokesman declined to give the sale price for the assets - previously reported as one rouble - the sum was confirmed as symbolic.
The agreement marks the end of an era for Renault in Russia, where the automaker owned 68 per cent of AvtoVaz, which runs a car plant on the banks of the Volga River dating back to Soviet times. Renault's roots in the country, which grew to become its second-biggest market, stem from a US$1 billion deal sealed in 2007 between its former chief executive Carlos Ghosn and a top ally of Russian President Vladimir Putin.
"We are making a responsible choice towards our 45,000 employees in Russia, while preserving the group's performance and our ability to return to the country in the future," Renault chief executive Luca de Meo said.
Moscow Mayor Sergei Sobyanin said Renault's plant near the city will start to produce Moskvitch cars, a Soviet-era model. AvtoVaz's Togliatti plant will continue to make Ladas.
REUTERS, BLOOMBERG
