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Volkswagen receives Kremlin approval to sell Russian assets

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Russian authorities have approved the sale of Volkswagen’s local assets to Avilon, one of the country’s biggest car dealers, in a price-cutting deal that highlights the challenges Western companies face when trying to exit Russia.

State news agency Interfax reported on Tuesday that the sale to Avilon, a major supplier of vehicles to the country’s security services, is not expected to exceed 125 million euros.

VolkswagenRussian fixed assets, including buildings and equipment, were valued at INR 111.3 billion (€1.5 billion) in 2022, according to company disclosures.

Last year, following President Vladimir Putin’s decision to go to war with Ukraine, Russia introduced strict criteria for the withdrawal of Western companies. Measures include selling at a discount of at least 50% and “voluntary donations” to Russia’s military budget.

Attorneys involved in recent corporate exits said meeting these criteria is necessary but not sufficient, as state foreign investment commissions decide each transaction on a case-by-case basis and may add additional requirements. It has said. But more than a year after Russia’s invasion of Ukraine, Western consumer groups are under increasing political pressure to stop doing business with Russia.

Requirements may also change for local buyers. Central bank governor Elvira Nabiullina said on Tuesday that it was “considering forcing buyers to put on the market a 20 percent stake in assets once owned by the West.”

VW has confirmed it is in the process of selling its stake in Volkswagen Group Russia, which includes the Kaluga plant, which employs 4,000 people, to a “reputable Russian investor.”

The German company did not comment on the amount of the transaction or whether it would receive any proceeds from the sanctions. “We will let you know when the transaction is officially completed.”

However, Russia’s decision on the deal includes a limit of “50 million per day” on European currency purchases by Avilon, with at least some of the funds likely to go to VW’s account. suggests that

VW’s exit from Russia was further complicated by a lawsuit filed by former partner Gaz Group, in which a Russian court temporarily frozen many of the German company’s assets.

The German automaker said last month that Siegfried Wolf, a member of the supervisory board of Porsche SE, in which the Porsche Piëch family controls Volkswagen, sent a letter to President Putin offering help. I was also shaken by the scandal that reported. He will rebuild the Russian automobile industry. Mr. Wolf, a former Gaz director, said in a letter that he could work with Gaz.

Volkswagen said it had no knowledge of the letter from Siegfried Wolf. [ . . . ] And that infuriating content,” he added, adding that the executives had not made any commitments with Wolf or any other parties interested in buying the company’s Russian business.

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