Adeo, the parent company of Leroy Merlin, said Friday "its intention to cede control" of the company, established for 18 years in Russia, its second market after the France. This operation "must make it possible to preserve the jobs of the 45,000 employees and to perpetuate the activity of the company," said in a statement the French group, owned by the Mulliez family.

The sale will be subject to the approval of the competent authorities in Russia, said the statement, which cites "a work begun several months ago in compliance with applicable regulations".

In an interview with the regional daily La Voix du Nord on Friday, the management said it wanted to make its stores in Russia autonomous in all respects.

"We don't know what the local authorities will tell us (...) Other companies such as Danone or Schneider have made the same request for an activity control session, they have been waiting for an answer for months, "says the management, quoted by the newspaper.

The choices of foreign companies in Russia © Sylvie HUSSON / AFP

The management team in Moscow includes French, but the group did not indicate in what proportion and did not give details of the operation.

Several brands owned by the Mulliez family remained well established in Russia, despite the invasion of Ukraine by Russian troops. Leroy Merlin's 113 stores in the country account for between 18 and 20 percent of the company's total turnover, she told AFP.

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Adeo had explained last year that it was maintaining its activity in Russia but that it was suspending all new investment, citing the risk of "expropriation" in case of withdrawal, a threat waved by the Russian authorities.

Auchan, another commercial brand belonging to the Mulliez family galaxy, achieves more than 10% of its sales in Russia, for 230 stores, according to mid-2022 figures.

However, while many French and Western groups have disengaged from Russia since the beginning of the war, the Mulliez family's decision to remain in the country has drawn criticism.

In mid-February, the head of Ukrainian diplomacy Dmytro Kuleba accused Auchan of having become a "full-fledged weapon of Russian aggression" after the publication of an investigation by the daily Le Monde according to which the group had contributed to Moscow's war effort, via a collection of products intended for Vladimir Putin's army in March 2022. Accusations denied by Auchan.

Ukrainian Foreign Minister Dmytro Kuleba in New York, February 24, 2023 © Michael M. Santiago / GETTY / AFP / Archives

The choice to disengage from Russia has a cost for Western societies. French bank Societe Generale divested itself of its Russian retail banking subsidiary, Rosbank, last year. A withdrawal that had resulted in a charge of more than 3 billion euros in its accounts.

"These are always difficult cases, when the sale transactions are more suffered than desired," says Guillaume Briant, a partner at Stephenson Harwood, a firm specializing in mergers and acquisitions.

"In the current context, there are often losses for the seller: when all Western companies leave a country at the same time, it limits the number of potential buyers. As long as there are time constraints, but also risks of expropriation, this does not work in favor of the sellers."

Before the war, more than 500 French companies (including 35 CAC 40 groups) operated in Russia, according to the Ministry of Economy. According to the same source, the France was, before the invasion of Ukraine, the largest foreign employer in Russia, with some 160,000 employees.

© NATALIA KOLESNIKOVA / AFP/Archives

In addition to Auchan, other big names such as Bonduelle and Lactalis continue their activities on site.

"For activities that are not subject to sanctions, but in a context of growing tension, there may be an interest for a company to pre-empt an exit today, rather than having to sell urgently if new international sanctions are put in place," said Guillaume Briant.

© 2023 AFP