Packaging firm Mondi has agreed to sell its largest Russian plant. The deal is subject to Russian government approval. The move is a result of the Russian market being volatile following EU sanctions. The Russian plant currently employs around 4,500 people.
Mondi had initially announced that it was ending operations in Russia on May 5, 2022. This followed the departure of other Western companies from Russian paper production. In response to the war in Ukraine, many Western companies ceased production in Russia. As of December 31, Mondi’s net assets in Russia stood at EUR680 million. Despite these issues, the packaging firm is still hiring in Syktyvkar, despite the pending closing.
The UK-based packaging firm had been looking for a buyer for its interests in Russia, and found a buyer in Augment Investments, a Russian company majority owned by Russian billionaire Viktor Kharitonin. Mondi had a number of plants in Russia, and Syktyvkar is the largest. The other two Russian plants are smaller and are not part of the deal.
In the past, the UK packaging firm has said that it was cutting ties with Russia, but that it is “doubling down on business.” While Mondi has been saying one thing and doing the other in the Russian market, it has also been funding the Russian War Machine. In other words, it appears to be a matter of morality and quick money.
The company’s underlying EBITDA was EUR1.2 billion in 2021. It employed around 21,000 people worldwide. The company has a premium listing on the London Stock Exchange and is a member of the FTSE100. Its stock also has a secondary listing on the JSE Limited.
The company recently announced a EUR 65 million investment in three Consumer Flexibles packaging plants across Europe. In addition, the company will invest in the Mondi Neusiedler paper mill in Austria. This project is aimed at tackling a demand linked to the Covid-19 crisis in the country. In the first half of 2013, the British packaging company acquired Olmuksan, which boosted its presence in the Turkish corrugated market.
The sale is subject to Russian government approval and shareholder approval at a general meeting. The company has three converting plants in Russia. The sale of Syktyvkar is valued at EUR1.5 billion. The deal excludes a cash balance of EUR255 million, which Mondi plans to distribute to Augment before the deal closes.