The departure of Nokian Tires from the Russian market has become closer: Tatneft has received the consent of the Federal Antimonopoly Service to acquire the plant and other assets of the Finnish tire company. The parties reached an agreement on the deal back in October last year, and Nokian Tires expected to raise about €400 million. However, now the company sees uncertainty about the terms and conditions of the deal, as well as the prospects of closing it in principle due to the need to agree with the authorities. Lawyers remind that the deal still has to be approved by a government commission.
The Federal Antimonopoly Service approved three requests from Tatneft to acquire a 100% stake in the authorized capital of Nokian Tires LLC, Hakka Invest LLC and Nokian Tire LLC from Nokian Tires, Kommersant was told in the antimonopoly service. The agreement on the sale of the Russian business to Nokian was signed in October 2022, and, as the Finnish tire company reported, the expected price of the transaction was about €400 million. The approval process at the FAS began in December.
On February 7, Nokian Tires reported in its fourth quarter financials that the deal was subject to approval by the Russian authorities. Because of this and “other conditions”, a significant uncertainty is created regarding the term, terms of the transaction and its closure, it was noted in the financial statements.
The FAS noted that if this transaction is subject to the provisions of the Decree of the President of the Russian Federation No. 618, then it can be made only after obtaining permission from the government commission for monitoring foreign investment. According to Kommersant, the documents must first be considered by the commission of the Ministry of Finance. Kommersant sent a request to the ministry.
NSP lawyer Ivan Chuvakin notes that obtaining FAS approval is not mandatory for filing documents with the government commission, although it can be an advantage. It does not seem that Presidential Decree No. 520 of August 5, 2022 (on the need to obtain special permission from the President of the Russian Federation) applies to Nokian assets, says Dmitry Dedov, senior adviser to INGVARR. Accordingly, if there are no assets in Nokian’s assets that meet the criteria of Decree No. 520, then it remains only to obtain the approval of the government commission under Decree No. 618.
Alexander Drozdenko, Head of the Leningrad Region, December 13, 2022:
“We still have difficult issues with our largest operation, Nokian Tires. It is very important for us that the enterprise will operate at its design capacity at least in the second quarter of next year.”
The Nokian Tires plant in Vsevolozhsk (Leningrad region) has been operating since 2005, and in 2021 Russia accounted for 20% of brand sales and 80% of output. After the crisis began, the company redistributed production, increasing production in Finland and the United States, and also began building a plant in Romania. Nevertheless, the enterprise in the Russian Federation continued to produce products. Tire imports from Russia to Europe and North America ended in July last year when the EU imposed an embargo on such shipments.
The Russian office of Nokian Tires told Kommersant that the plant in Vsevolozhsk will continue to produce tires for cars and SUVs under a different brand after the change of ownership. At the same time, they did not comment on whether we are talking about new trademarks, applications for registration of which were submitted by a Russian legal entity. “Decisions related to changing the brand will be made by the new owner,” they noted.
In December 2022, Nokian Tiers applied for the Torsten and Torsten, Ikon and Ikon Tires brands (see Kommersant dated December 14, 2022). Now the names “Winger” and Winger, “Ragnar” and Ragnar, as well as “Tarantula” and Tarantul have been added to them. Also, the trading company Nokian Tire received the rights to the trademarks Ivanor Service & Market, Ivanor and Ivanor, and Nokian Tiers – to the name Ikonan. The company also registered domains without mentioning Nokian or its brands – this is what other foreign companies do in preparation for the sale.
Now production at the Nokian Tires tire plant in Vsevolozhsk is not carried out due to a planned shutdown required for localization, including information systems, the company told Kommersant.
“Localization processes are progressing according to plan. The plant will be ready to start production in the near future,” they explained.