(Reuters) -A Russian businessman who flaunts his pro-war credentials on Instagram is planning to take over Danone's Russian assets for 17.7 billion roubles ($191.52 million), the Financial Times reported on Wednesday, months after Moscow seized temporary control.
The deal would mark the latest Western asset transfer into Kremlin-friendly hands at a heavily discounted price, after scores of foreign companies sold or abandoned their businesses in Russia following Moscow's February 2022 invasion of Ukraine.
Citing a letter sent to Agriculture Minister Dmitry Patrushev, the FT said the French dairy products group was planning to sell its Russian operations to a member of the Kremlin-installed management team, led by Yakub Zakriev, a nephew of Chechen leader Ramzan Kadyrov.
Danone, which is scheduled to report its full-year 2023 earnings on Feb. 22, declined to comment. The Kremlin placed Danone's Russian assets under temporary management in July 2023 in retaliation against sanctions on Russian companies abroad.
Dairy company Vamin Tatarstan, owned by businessman Mintimer Mingazov, plans to pay for Danone's business, rebranded in Russia as "Life & Nutrition", according to Ayrat Mukhamadeev, director of a newly created Vadim Tatarstan company.
Vamin and the agriculture ministry did not respond to requests for immediate comment.
Danone will receive 10 billion roubles ($108.40 million) for its equity while 7.7 billion roubles will go towards servicing debt in the Russian unit, the report added.
Mukhamadeev's letter said the price represented a 56% discount to market value. Moscow demands discounts of at least 50% for foreign asset sales after a Russian valuation.
Mukhamadeev noted that Danone had agreed to provide support to Life & Nutrition until July 2025 to preserve high quality standards, the FT said.
'DISTRESSED SALE'
Mingazov was installed to the company's board after Zakriev took control, the FT said, citing documents seen by the newspaper and people familiar with the situation.
Mingazov's latest post on Instagram shows him smiling alongside Akhmed Dudayev, Chechnya's minister for national policy, foreign relations and information, who had confirmed Zakriev's appointment.
In another post, Mingazov is pictured with men in army fatigues in eastern Ukraine, sporting the 'Z' motif Russia has adopted as a military symbol on his sleeve.
Mingazov did not reply to a request for comment.
After July's seizure, Danone took the overall writedown on its Russian operations to around 700 million euros ($756.63 million), after earlier warning that a deal to sell its unit could lead to a write-off of up to 1 billion euros.
Ian Massey, Head of Corporate Intelligence, EMEA, at global risk consultancy S-RM, said any sale was preferable to an uncompensated state takeover and the deal allows Russia to exert closer control over strategic food production assets.
"This is a distressed sale in the truest sense and it is unlikely that Danone has had many options in the negotiations," Massey said.
($1 = 92.4175 roubles)
($1 = 0.9252 euro)