Unilever PLC (GB:ULVR) has reportedly agreed to offload its Russian business to a chemical manufacturing company, Arnest. According to Russian media outlets Kommersant and RBC, the agreement has already received government approval and could generate up to $500 million for Unilever.
Unilever is an FMCG company with a diverse portfolio of well-known brands, including Dove, Knorr, Lifebuoy, Axe, Sunsilk, and Lux.
Unilever Exits Russia
The deal will mark the exit of Unilever’s business from Russia. The company’s Russian operations involve Unilever’s subsidiary, Unilever Rus LLC, which holds the domestic rights to the company’s brands, including Knorr, Dove, Domestos, and Axe.
RBC reports that the deal value of up to $500 million will incorporate the mandated 50% discount on asset sales as stipulated by Russian law. Furthermore, the company will incur an exit tax of 10-15% on the transaction.
Unilever held around €600 million in net assets, including four factories in Russia. In 2023, Unilever’s Russian operations accounted for about 1% of the company’s turnover and net profit.
Unilever’s Russian Dilemma
Since the Russian invasion of Ukraine, Unilever has faced controversy for its decision to continue operating in the country. The company had to navigate complex geopolitical challenges and business decisions as many Western brands exited Russia in response to the conflict.
In 2022, Unilever said it couldn’t exit Russia due to concerns that its assets might be seized by the Russian State. Instead, the company committed not to profit from its Russian operations, suspending all financial transactions and trade with the country. However, it was later reported that the company continued to earn millions in royalties from its Russian subsidiary.
What Is the Target Price for Unilever PLC?
On TipRanks, ULVR stock has a Moderate Buy rating based on a total of 13 recommendations. It includes six Buy, five Hold, and two Sell recommendations. The Unilever share price target is 4,513.64p, which is 9.5% below the current trading price.
Year-to-date, ULVR stock has gained 30.32%.
