British American Tobacco has reached an agreement to sell its operations in Russia and Belarus, the company announced on Thursday, more than 18 months after Moscow’s large-scale invasion of Ukraine sparked a mass exodus of Western companies from Russia.
BAT (BTI) said in a statement that it had entered into a formal sale agreement with a consortium led by members of the management team of its Russian operations. He expects the deal to be finalized by next month, he added.
“Once finalized, BAT will no longer have a presence in Russia or Belarus and will not derive any financial gain from ongoing sales in these markets,” the company said.
A BAT spokesperson declined to comment on the sale price.
In February, the company said its 2022 results were hit by a £612 million ($764 million) charge related to its Russia and Belarus businesses. Impairment charges, ie a sharp reduction in the value of assets, accounted for the bulk of this amount.
BAT’s Russian and Belarusian activities represent approximately 2.7% of its turnover.
The $72 billion company said as early as March last year, shortly after the outbreak of war, that its stake in the Russian business was “no longer viable in the current environment”.
But since then, the Kremlin has made it increasingly difficult for Western companies to withdraw from Russia and forced them to pay heavy taxes to the government for the sale of their assets.
Dutch beer maker Heineken announced its departure from the country last month, saying it had sold its Russian operations for a symbolic euro ($1).
Company CEO Dolf van den Brink said in a statement at the time that the process had taken “significantly longer” than expected and highlighted the “significant challenges faced by large manufacturing companies” which attempt to leave Russia.
Under BAT’s agreement, employment conditions for its Russian and Belarusian workers will be comparable to their current conditions for at least two years after the sale is finalized.