MOSCOW (Reuters) – Swedish furniture giant IKEA does not have an option to buy back its largest factory in Russia, the new owner said on Tuesday, closing a possible route back to the country should it wish to return one day.
Invest Plus, a special purpose vehicle beneficially owned by Vadim Osipov, finalised a deal to buy IKEA’s plant in the city of Novgorod in late March. Osipov is CEO and co-owner of Slotex, a Russian producer of laminates and kitchen worktops.
“The deal does not involve any buyback option,” Osipov said in a press conference on Tuesday, adding he could not disclose other terms of the deal.
“We aim to develop this purchase as a strategic investor on a long-term basis,” Osipov added.
The factory’s name, IKEA Industry Novgorod, must be changed within eight months of the deal’s completion, he said.
IKEA halted all retail and production operations in Russia soon after Moscow sent troops into Ukraine on Feb. 24, 2022, along with scores of other Western companies. IKEA briefly resumed online sales last summer and part of the company still operates 14 MEGA-branded shopping malls in Russia.
Local media in February reported that Ingka Group, the owner of most IKEA stores, had started looking for buyers for the malls.
IKEA has previously declined to disclose terms relating to its departure.
Exits by Western companies have been complicated as deals involving firms from so-called unfriendly countries – those that imposed sanctions against Russia – need approval from a government commission. Companies often insert buyback clauses that could one day see them return.
Osipov said the factory should be fully operational again in three to six months, with some production to resume at the end of May.
Investments in the plant will amount to 2-3 billion roubles ($25.3-$37.9 million) over the next two or three years, he said.
The Russian government approved the sale to Slotex in February, also giving lumber manufacturer Luzales the right to finalise a deal for two other IKEA plants.
In the year to August 2021, Russia was IKEA’s 10th-biggest market with retail sales of 1.6 billion euros ($1.8 billion), or 4% of total retail sales.
($1 = 79.2060 roubles)
(Reporting by Olga Popova Writing by Alexander Marrow; Editing by Mark Potter)
