Leroy Merlin intends to hand over control of all its stores in Russia

More than a year after the start of the conflict in Ukraine, French Leroy Merlin, the DIY equipment giant and one of the major foreign employers in Russia, announced that it intends to cede control of all its stores in the country, including One of its biggest markets.

Leroy Merlin’s parent company Edio signaled Friday that it intends to cede control of the 18-year-old company to Russia, its second market after France. The operation “makes it possible to preserve the jobs of 45,000 employees and maintain the company’s activity”, argues a press release from the French group owned by the Mullies family.

The sale will be subject to approval by the competent authorities in Russia, specifies the press release, which cites “work initiated several months ago in compliance with applicable regulations.”

In an interview with regional daily La Voix du Nord on Friday, management said it wanted to make its stores in Russia autonomous in every way.

“We don’t know what the local authorities will tell us (…) other companies like Danone or Schneider have made the same request for activity control sessions, they have been waiting for a response for months”, points out Disha, Quoted by newspaper.

The management team in Moscow consists exclusively of French people, but the group did not say in what proportion and did not give details of the operation.

Despite the invasion of Ukraine by Russian troops, several brands owned by the Mullij family remained very established in Russia. He told AFP that the 113 Leroy Merlin stores in the country represent between 18 and 20% of the company’s total business.

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Adio reported last year that it was maintaining its activities in Russia, but that it was suspending all new investments, citing the risk of “hijacking” in the event of a withdrawal, a threat waved by Russian authorities. Had been.

According to mid-2022 data, Auchan, another commercial brand belonging to the Mulliz family galaxy, receives more than 10% of its sales in Russia thanks to 230 stores.

Although many French and Western groups have withdrawn from Russia since the start of the war, there has been criticism of the Muliz family’s decision to remain in the country.

In mid-February, the head of Ukrainian diplomacy, Dmytro Kouleba, accused Auchan of becoming a “weapon in its own right of Russian aggression” following the publication of an investigation by the daily Le Monde, according to which the group had contributed to Moscow’s war effort. , through a collection of products intended for the army of Vladimir Putin in March 2022. The allegations were denied by Auchan.

The option of breaking away from Russia is costly for Western companies. French bank Société Générale thus spun off from its Russian retail banking subsidiary Rosbank last year. a withdrawal that resulted in charges of more than 3 billion euros on its accounts.

“These are always difficult cases, when transfer operations suffer more than desired”, analyzes Guillaume Bryant, associate counsel at Stephenson Harwood, a firm specializing in mergers and acquisitions.

“In the current context, there is often a disadvantage for the seller: when all Western companies leave a country at the same time, it limits the number of potential buyers. There are risks too, it does not work in favor of sellers”.

Before the war, more than 500 French companies (including 35 CAC 40 groups) operated in Russia, according to the Ministry of Economy. Always from the same source, France, prior to the invasion of Ukraine, was the first foreign employer in Russia with approximately 160,000 employees.

Besides Auchan, other big names like Bonduel and Lactalis continue their activities there.

“For activities that are not subject to sanctions, but in the context of rising tensions, it may be in the interest of a company to exit today, rather than be forced to exit if new international sanctions are implemented.” Must be sold immediately”. Judge Guillaume Bryant.