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Employees work on the assembly line of the Lada automobile plant in Izhevsk. Picture: REUTERS
Employees work on the assembly line of the Lada automobile plant in Izhevsk. Picture: REUTERS

Renault will transfer its 68% stake in Russia’s biggest carmaker Avtovaz to an auto research institute for one symbolic rouble, Russia said, the latest example of local institutions snapping up bargains as Western firms flee.

The trade ministry also said Renault’s factory in Moscow, which produces cars under the Renault and Nissan brands, would be passed to the city’s government, in another sign of what Russian authorities plan to do with Western assets.

The French carmaker and the French government, which owns a 15% stake in Renault, both declined to comment on the deal, which was first reported by Russian news agencies citing trade minister Denis Manturov.

The trade ministry said Renault would have the right to buy back its Avtovaz stake within five to six years from NAMI, an institute founded over a century ago behind the design and building of Russia’s cars and trucks — including the limousines used by President Vladimir Putin.

The moves are likely to underscore concerns that Russian firms and institutions are snapping up the country’s most prized assets for a bargain as Western companies scramble to comply with sanctions over the Ukraine conflict, as well as threats from the Kremlin that foreign-owned assets may be seized.

The Russian government is drawing up legislation that could see control of foreign companies handed over to external local management and make it a criminal offence for foreign executives and companies to implement sanctions.

Renault, the Western carmaker most exposed to Russia, said in March it would suspend operations at its Moscow plant and was considering a €2.2bn non-cash writedown to reflect the potential costs of the suspension.

Renault decided to transfer its stake in Avtovaz, which owns the famed Lada brand, to NAMI because it lacked the ability to keep its Russian operations going, the trade ministry said.

The deal would be worth a single rouble and gives Renault the option to buy the stake back, it said.

Moscow’s invasion of Ukraine on February 24 has prompted a mass corporate exodus from Russia. More than 750 companies have announced they are curtailing operations there to some degree, according to the Yale School of Management.

Reuters

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