PMI to sell all of its Russia business
According to the Financial Times, Philip Morris International’s attempt to sell its Russia business has stalled due to difficulties in meeting the conditions required to exit the country. PMI CEO Jacek Olczak said discussions with at least three serious p
According to an article in the Financial Times, Philip Morris International's attempts to sell its Russian business have stalled due to difficulties in meeting the conditions for exiting the country.
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PMI CEO Jacek Olczak stated that discussions with at least three "serious" potential buyers have not progressed, partly due to the government's strict requirements.<\/div>
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The Kremlin's regulations make it difficult for companies to exit Russia without incurring significant financial losses. Among other regulations, the government retains the right to determine the valuation of foreign companies' assets in Russia, as well as the dividends and cash flows of new owners.<\/div>
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Olczak told the Financial Times that he has a responsibility to recover value for shareholders and added that he "would rather retain" the Russian business than sell under the Kremlin's strict terms. According to company documents, while the asking price has not been disclosed, PMI has assets worth $2.5 billion in the country.<\/div>
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According to research from the International Institute for Management Development, many Western companies vowed to exit Russia immediately after the invasion of Ukraine last year, but by the end of December, less than 9% of EU and G7 companies had left the country.<\/div>
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Historically, Russia has been a huge market for the tobacco industry due to high smoking rates and consumer willingness to switch to e-cigarettes and heated tobacco products. Together with Ukraine, it accounted for 8% of PMI's $31.7 billion revenue last year.<\/div>
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Shortly after the war began, Imperial Brands sold its Russian business to local partners, incurring a profit loss of $463 million.<\/div>
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Japan Tobacco does not plan to exit, while British American Tobacco has been struggling to sell, although it stated this month that it is in "advanced negotiations." <\/div>
