McDonald's and Renault on Monday became the latest companies to announce asset sales in Russia, part of the ongoing international response to Russia's attack on Ukraine that began Feb. 24. McDonald's stock fell in early trade.
McDonald's said Monday that, for the first time in its history, it was "de-Arching" a major market and selling its portfolio of McDonald's restaurants." The company had closed a reported 850 restaurants in Russia in March.
A statement from the Chicago-based chain said, "The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald's to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald's values."
Although McDonald's stock traded lower, the initial reaction from Wall St. appeared positive. "We think today's announcement removes a potential overhang for McDonald's stock, given the ongoing costs related to its operations in Russia and Ukraine (roughly $55 million/month in employee pay, lease and supply chain costs, etc.)," RBC analyst Christopher Carril wrote in a note Monday.
McDonald's Russia Exit: Billion-Dollar Charge
McDonald's aims to book a charge between $1.2 billion and $1.4 billion related to the move. It is seeking a deal with a domestic buyer and attempting to make future employment for its 62,000 workers in the country part of that agreement.
In addition, McDonald's plans to retain all of its trademark rights within Russia, but will not allow former restaurants to use any proprietary names, menu items or symbols (such as the golden arches).
Meanwhile, McDonald's restaurants in Ukraine are closed, but workers are reportedly continuing to be paid.
Renault Sale
French automaker Renault said Monday it would sell Renault Russia to the state-backed entity NAMI. The deal also includes Renault's 68% stake in Russian automaker AvtoVAZ.
Moscow-based NAMI is an automotive research and development organization.
The Wall Street Journal reported in April that negotiations determined that Renault would surrender the operations for the symbolic sum of one ruble. The Moscow Times on Monday called the exchange a nationalization, and said " the first major transfer of private assets into state hands after Russian officials threatened to nationalize Western businesses exiting over Moscow's invasion of Ukraine."
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A statement from Renault said it had taken the "responsible choice toward our 45,000 employees in Russia." It also said it retained the option to buy back the Avto stake within six years.
A tracker run by the Yale School of Management reports that nearly 1,000 companies have now curtailed operations in Russia. Companies that previously sold assets include Kinross Gold, according to Reuters.
McDonald's shares fell 0.4% on the stock market today. Renault's over-the-counter shares were unchanged.
