Danone's Russian business might be sold to Vamin Tatarstan

An agreement has been reached to sell the Russian business of French food multinational Danone, Health & Nutrition (H&N), to Russian investors, said Interfax.

The source said dairy company Vamin Tatarstan and Chechen Deputy Prime Minister Yakub Zakriyev, nephew of Chechnya's leader Ramzan Kadyrov, are interested in buying the business. Zakriyev headed H&N from July 2023 to March 13, 2024, while the company was under the temporary management of the Federal Property Agency by order of the Russian president.

The buyers plan to pay for the business equally, the source said, adding that this has already been decided. But "on paper, meaning officially, the company is unlikely to be split in half," the source said.

Vedomosti also reported a source close to the Russian government and a source at a financial company as saying that Vamin Tatarstan and Zakriyev are interested in Danone's assets. The latter said that the French company was forced to agree to a substantially lower price for the business.

Representatives of Danone and H&N declined to comment. A spokesman for Vamin Tatarstan said that "there is no official information" and the companies are not commenting. The press services of the government of Chechnya and Russia's Agriculture Ministry, which is supposed to approve the deal, did not respond to questions, Vedomosti said.

The Financial Times, citing non-public documents, reported in late February that Danone planned to sell its business in Russia to Vamin Tatarstan. According to these documents, Vamin is owned by Mintimer Mingazov, who was appointed to the board of directors of H&N after the company was put under state management Zakriyev was appointed to head it.

In a letter sent to Russian Agriculture Minister Dmitry Patrushev, the director of a recently created company owned by Vamin, Airat Mukhamadeyev said that it had agreed to pay 17.7 billion rubles ($191.5 million) for control of Danone's Russian business, the FT said. Of this amount, 7.7 billion rubles will go toward servicing the debt of the Russian business and the rest will go toward paying for Danone's stake in the company.

Mukhamadeyev said in the letter that the price of the transaction represents a 56% discount to the market value of the business, according to an independent appraisal cited by the company.

He also said that, in order to ensure the continuity of its former Russian business, Danone has agreed to provide support until the end of July 2025, since H&N is continuing to localize production of certain ingredients in order to maintain the "high quality of products that Russian consumers are used to."

The head of Infoline-Analitika, Mikhail Burmistrov was reported as saying by Vedomosti that the fair value of Danone's Russian business, which includes 17 plants, is at least 60 billion rubles without its brand portfolio and about 80 billion rubles with the brands. The amount of 17.7 billion rubles is therefore 67%-72% less than the fair value, making it a "super lucrative deal" for the buyers, he said.

President Vladimir Putin signed a decree in mid-March cancelling the transfer of JSC Danone Russia and JSC Danone Trade to the temporary management of the Federal Property Agency. These Russian subsidiaries of the French company were renamed H&N and H&N Trade, respectively, after they were put under state managed in July 2023.

Danone Russia closed 2022 with net profit down to 5.6 billion rubles from 8.9 billion rubles a year earlier, on revenue up to 92.9 billion rubles from 85.1 billion rubles, the SPARK-Interfax system showed. Danone Trade's net profit fell to 612.7 million rubles from 1.4 billion rubles, although revenue rose to 112.7 billion rubles from 109.9 billion rubles.

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Russian oil company Gazprom Neft has opened a plant to recycle plastic packaging into secondary granules in Gatchina, Leningrad Region with annual capacity of 8,600 tonnes, said Interfax.

The new plant will handle the complete cycle of recycling plastic packaging made of polypropylene and polyethylene into feedstock for subsequent use, the company said.

The company will ship the produced feedstock, secondary polymer granules to Russian manufacturers of plastic products, as well as use them in-house to produce waterproofing materials for industrial and civilian construction.

The new plant has modern plastic recycling equipment and a closed-cycle water treatment system to ensure environmentally-friendly production, the company said. "The filtration equipment makes it possible to capture small plastic particles, purify the water and return it to the production cycle," the press release said.

Gazprom Neft expects that the use of secondary granules within the company will reach 3,200 tonnes per year by 2030.

"Using recycled raw materials is more cost effective and the recycling process is safe for the environment. Our plastic materials recycling project is an important step for the development of a closed-loop economy in the country. Its implementation will make it possible to return all the plastic that we and our partners produce into the production process," Gazprom Neft's head of petrochemicals and LPG, Igor Korolev said in the press release.

We remind, Gazprom is sticking to its goal of achieving 100% of the technically possible level of network gasification by 2030, and is actively working with the regions via five-year programs, Deputy Chairman of the Board of Gazprom Oleg Aksyutin said in an article in the company's corporate magazine.

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Clariant, a sustainability-focused specialty chemical company, and its process partner Lummus Technology have been selected by Huizhou Boeko Materials Co. Ltd., to provide their CATOFIN catalyst and process technology for the dehydrogenation of isobutane at the new plant in Huizhou City, China, said the company.

The process technology is exclusively licensed by Lummus Technology, while the tailor-made catalyst is supplied by Clariant. It is the first time Huizhou Boeko will license the CATOFIN technology at one of their sites.

The scope of the current award includes the technology license and basic engineering. Once complete, the plant will produce 550,000 metric tons per annum (MTA) of net isobutylene, which will serve as feedstock for the downstream production of methyl tertiary butyl ether (MTBE). The highly efficient CATOFIN process uses fixed-bed reactors and operates at optimum reactor pressure and temperature to maximize catalytic dehydrogenation of isobutane for high yields of isobutylene at low investment and operating costs.

“We are delighted to deliver our industry leading CATOFIN catalyst to this first Huizhou Boeko plant and look forward to a fruitful partnership. CATOFIN offers excellent reliability and productivity, yielding superior annual production output, which in turn leads to increased overall profitability for the plant,” said Jens Cuntze, Business President Catalysts and APAC at Clariant.

We remind, Clariant is a focused specialty chemical company driving value creation with its innovative and sustainable solutions across diverse industries. With this partnership, Safic Alcan will offer Clariant’s range of functional ingredients including emollients, emulsifiers, rheology modifiers, pearlizers, preservatives, and mild surfactants, complementing its existing range and providing more valuable synergies for customers.

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Iraq will reduce its crude exports to 3.3 MM bpd in the coming months to compensate for any rise above its OPEC+ quota in January and February, said Hydrocarbonprocessing.

Iraq is committed to voluntary cuts agreed with the OPEC+ group of oil-exporting countries and is coordinating with secondary sources to reflect the export curbs in their upcoming OPEC+ reports, the ministry said in a statement.

The de facto Saudi-led Organization of the Petroleum Exporting Countries and allies including Russia, known collectively as OPEC+, have implemented a series of output cuts since late 2022 to support the market. A new cut for the first quarter took effect in January and earlier this month was extended to cover the second quarter.

Oil has found support in 2024 from rising geopolitical tensions and Houthi attacks on Red Sea shipping, although concern about economic growth has weighed.

Iraq's production quota is 4 million barrels per day (bpd) under the voluntary cuts. The secondary sources, which provide data on OPEC+ members' production, reported Iraq's production at 4.2 million bpd in February.

Iraq's oil exports averaged 3.43 million bpd in February, the oil ministry said earlier this month.

We remind, Iraq reopened its North Refinery in Baiji that was shut for a decade during the violence and chaos that followed the U.S.-led invasion in 2003, which made it nearly impossible to run one of the country's most vital energy complexes. The fall of Saddam Hussein was meant to bring stability and prosperity to major OPEC oil producer Iraq after years of economic mismanagement and military misadventures brought the country to its knees.

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Saras reported a 41% fall in its full-year comparable core earnings due partly to weaker profitability of refined products, as global commodity trader Vitol prepares to take over the Italian oil refiner later this year, said Hydrocarbonprocessing.

Saras, which is controlled by Italy's Moratti family, said its comparable earnings before interest, taxes, depreciation and amortization (EBITDA) fell to 669.7 million euros (USD730 million) in 2023. The company cited a drop in the "diesel crack", a metric representing the profitability of refined products, to an average of $26.4 per barrel from $37.7 per barrel in 2022, and also a weaker dollar versus the euro.

Saras Group - founded 62 years ago by the father of its current chairman Massimo Moratti - is the owner of the Sarroch plant in Sardinia, which is the single biggest refinery in the Mediterranean with a capacity of 300,000 barrels per day. The Moratti family agreed in February to sell 35% of the company to Vitol at 1.75 euros per share, valuing the entire group 1.7 billion euros.

Upon closing of the deal, the entire stake owned by the Moratti family in Saras will be transferred to Vitol, triggering a mandatory tender offer for the outstanding share capital of the group, with the aim to delist it. Moratti said on Friday that the decision to sell control to Vitol "was a very difficult and emotional choice but taken for the good of the group".

"Vitol... will be able to make Saras grow further, bringing great financial and commercial strength, as well as international professional expertise," Saras chairman added. The Italian government will review the transaction under its so-called "golden power" vetting rules for industries deemed of strategic importance such as banking, energy, telecoms and health.

Rome will seek commitments from Vitol on jobs, investments and continuity of supplies when reviewing the commodity trader's plan to take over the refiner, two sources told Reuters last month. On Friday Saras said its net financial position at the end of 2023 was positive at 167 million euros.

The group will hold a shareholders meeting on April 29 to approve the payment of a dividend equal to 0.15 euros per share.

We remind, circular plastics now account for 13.5% of the content in new plastic products manufactured in Europe, according to industry association Plastics Europe (Brussels). The association today published its biennial “The Circular Economy for Plastics: A European Analysis” report, which noted that the figure means the European plastics sector is more than halfway toward the interim ambition of Plastics Europe’s Plastics Transition roadmap to use 25% of plastics from circular sources in new products by 2030.

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