Lucky Strike cigarette maker British American Tobacco (BAT) has recently made a significant decision to withdraw from Russia, marking the end of its operations in the country.
This move comes after 561 days since Russia initiated a full-scale invasion of Ukraine.
Agreement to Sell Russian and Belarusian Business
BAT, renowned for its brands like Dunhill, Kent, and Pall Mall, disclosed that it has entered into an agreement to sell its Russian and Belarusian business.
Importantly, BAT emphasized that this transaction is in compliance with both local and international laws.
Furthermore, BAT committed to not receiving any financial gain from ongoing sales in these markets.
Consortium Led by BAT Russia’s Management to Take Over
The buyer of BAT’s Russian and Belarusian business is a consortium led by members of BAT Russia’s management team.
Upon completion of the deal, this consortium will wholly own both businesses.
BAT also ensured that its employees will be retained on terms that are comparable to their existing BAT terms for at least two years post-completion.
The completion of this transaction is expected within a month.
Rebranding as ITMS Group
Following the acquisition, the new owners plan to rename the business as ITMS Group.
BAT, which has a head office in Moscow, 75 regional offices, and a factory in St Petersburg, also maintains an office in Belarus.
Notably, BAT’s Russian and Belarusian business accounted for approximately 2.7% of BAT’s revenue at the end of June, along with 2.5% of adjusted profit from operations, taking currency fluctuations into account.
Longstanding Pressure on BAT to Exit Russia
BAT’s decision to exit Russia follows nearly 18 months of deliberation.
The tobacco giant had initially acknowledged that “BAT’s ownership of the business in Russia is no longer sustainable in the current environment” at the start of the war.
It had also indicated that it was taking steps to expedite the transfer of its Russian business.
However, progress appeared slow as the conflict in Ukraine persisted.
Concerns About BAT’s Exposure to Russian Markets
Campaign group B4Ukraine expressed concerns about BAT’s continued exposure to Russian markets and the associated risks related to Russian operations.
They argued that BAT’s activities in Russia could potentially enable and finance Russia’s violations of international humanitarian law and human rights law during the ongoing invasion and occupation of Ukraine.
These violations encompass a range of serious offenses, including attacks on civilians and civilian infrastructure, mass executions, sexual violence, torture, and the forcible transfer of civilians.
BAT Avoids “International Sponsors of War” Designation
Unlike some of its counterparts in the cigarette industry, such as Philip Morris International and Japan Tobacco International, BAT managed to avoid being labeled as “international sponsors of war” by the Ukrainian government.
Notably, the list of such sponsors also includes UK companies like Unilever and Mondi, along with Procter & Gamble, Yves Rocher, Mondelez (owner of Cadbury), Bacardi, PepsiCo, and Mars, among others.