Tobacco company Philip Morris has decided not to sell its business in Russia yet.
The manufacturer of IQOS and "Parliament" does not want to agree to the harsh conditions of the Russian government imposed on residents of unfriendly countries, and does not intend to get rid of business in the Russian Federation for the time being. Philip Morris CEO Jacek Olczak told the Financial Times the other day.
Recall that back in March 2022, after the introduction of economic sanctions by Western countries, it was established that transactions by residents of unfriendly countries with Russian companies are possible only with the consent of the government commission for monitoring foreign investment. Before signing the documents, a Russian company or a foreign company must apply with an appropriate application for permission to deal. In particular, comprehensive information about the parties, including the real beneficiary, must be provided.
When considering an application, the commission is guided by four criteria (which became known in the fall of 2022). These include: the availability of an independent valuation of assets, the condition of transferring 10% of the amount to the budget (or providing the Russian buyer with installments), a 50% discount on the cost established in the conclusion of a professional appraiser.
Philip Morris, represented by its CEO, admitted that it would rather keep its business in Russia than sell it on the Kremlin's terms. Olchak also focused on the huge financial losses threatening to leave the Russian market and bureaucratic difficulties. He said that since March, three serious buyers had been found. But in the end, the negotiations ended in nothing, since no one understands how to make a deal without serious losses. Olchak stressed that he has obligations to the shareholders of the company, who are its actual owners.
Since it is impossible to settle all the formal delays, Philip Morris CEO prefers to leave everything as it is for now. At the same time, it is known from the company's reports that it has assets in Russia worth about $2.5 billion.
Historically, Russia has been a big market for Philip Morris (together with Ukraine, it accounted for 8% of the company's revenue last year) due to the spread of smoking and the willingness of consumers to switch to vapes and electronic cigarettes. In addition, the company has a plant in St. Petersburg and 100 representative offices in the regions of the Russian Federation, a long history of relations with Russia since 1977.
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