The Swedish IKEA closed a deal to sell its last production site in Russia – a furniture factory in the Novgorod region – to the co-owner of St. Petersburg Slotex Vadim Osipov. Two other enterprises went to the timber company from Komi “Luzales”. According to Kommersant’s information, the total amount of all transactions could be about 15 billion rubles, a quarter less than the amount requested by the seller. Large companies from other industries were also interested in factories, but some of them did not buy enterprises due to IKEA’s refusal to transfer the rights to furniture produced in the Russian Federation.
Invest Plus closed a deal to buy IKEA Industry Novgorod, an IKEA production site in Podberezye, Novgorod Region. This was reported to Kommersant by a representative of the St. Petersburg Slotex. The co-owner of this company, Vadim Osipov, according to SPARK-Interfax, owns 99% in Invest Plus. The deal to buy out the IKEA factory was made out to the SPV company, notes Elena Feoktistova, managing partner of RP-Consulting, which means that the business will develop independently and will not be part of Slotex. This was confirmed by Kommersant and Mr. Osipov.
Slotex was founded in the early 1990s in St. Petersburg by Evgeny Osipov. After the departure of Mr. Osipov from life, the business was transferred, among other things, to his son, Vadim Osipov. The company produces furniture boards, countertops and facades for kitchen furniture, which were also supplied by IKEA, at its four sites in the Leningrad Region. According to its own data, revenue in 2021 amounted to 5.8 billion rubles.
IKEA announced a year ago that it was completely withdrawing from the Russian market due to the Russian-Ukrainian military conflict. Last week, the purchase of two IKEA enterprises – in Tikhvin, Leningrad Region and Krasnaya Polyana, Kirov Region – was closed by the timber processing company Luzales, as RBC was told by the head of its board of directors, Ruslan Semenyuk. IKEA previously called the Slotex structure and Luzales “suitable buyers” of their assets in Russia.
IKEA in Russia still has a network of Mega shopping centers with a total area of 2.34 million square meters. m. But the sale of a single lot of all objects against the backdrop of a crisis in the retail real estate market may be problematic.
A Kommersant source familiar with the situation says that IKEA has valued three of its enterprises in the Russian Federation at almost 20 billion rubles, which is slightly higher than their total annual revenue. But the government commission for the control of foreign investment (oversees the sale in the Russian Federation of the assets of foreign companies leaving the market) agreed to approve transactions with a discount of up to 25%, says the interlocutor of Kommersant.
Thus, IKEA can earn up to 15 billion rubles from the sale of production sites. The parties to the transactions do not disclose their amounts.
Mr. Osipov only emphasized that his deal was for money.
According to SPARK-Interfax, in 2021, the revenue of the Novgorod enterprise IKEA amounted to 9.98 billion rubles, which is the highest figure of all three enterprises. The factory annually produces up to 500 thousand cubic meters of chipboard and 7 million cases of kitchen furniture and cabinets, including for Pax and Method, the best-selling IKEA products, says BusinesStat CEO Denis Molchan. In 2021, the revenue of the IKEA factory bought out by Luzales in Tikhvin amounted to 5.5 billion rubles, enterprises in the Kirov region — 2 billion rubles.
Often, in transactions for the sale of Russian assets of foreign companies, there is an option to buy back, says Dmitry Gabyshev, managing director of Peregrine Capital. But, according to Vadim Osipov, in the case of IKEA, such a condition is not provided.
According to another Kommersant source, about 30 companies were interested in buying IKEA factories, including housing developers PIK and Level Group, as well as structures of AFK Sistema. PIK and AFC do not comment on this topic. Level Group co-owner Kirill Ignakhin explained to Kommersant the reluctance to buy assets by the fact that the manufactured products are oriented to deliveries to the EU, which has now become difficult, and by IKEA’s refusal to transfer the rights to manufacture original furniture for which the production was built.
About 75% of products manufactured by IKEA in the Russian Federation were exported, confirms Alexander Shestakov, President of the Association of Furniture and Woodworking Industries. According to him, taking into account the reduction of Russian exports last year by 39%, it is now very difficult to find new sales markets. The volume of furniture produced by IKEA in the Russian Federation, the expert concludes, is difficult to sell on the domestic market.