Explainer-What we know about Russia's move to take control of Nestle, Auchan assets

Sept 18 (Reuters) - Swiss food giant Nestle and French retailer Auchan are scrambling to respond after Russian President Vladimir Putin placed their local businesses under temporary administration, a move that could pave the way for the assets to be seized.

The decision is Russia's latest effort to tighten control over foreign-owned companies since the start of the Ukraine war in 2022.

According to a 2025 estimate by Moscow law firm NSP, the Russian state has seized more than $50 billion worth of private property, including assets owned by foreign companies.

Nestle said on Friday it would take "all necessary steps" to protect its interests. Auchan declined to comment.

WHAT BUSINESSES DO NESTLE AND AUCHAN HAVE IN RUSSIA?

Nestle been present in Russia since the 1990s and runs six factories making products including coffee, pet food and infant formula. It has said it employs about 7,000 people in the country, which accounts for an estimated 1% of its global sales.

After Russia's full-scale invasion of Ukraine in 2022, Nestle suspended many brands and halted non-essential imports, exports, advertising and capital investment in the country, while continuing some essential food operations.

Auchan entered Russia in 2002 and remains one of the country's largest foreign retailers. At the end of 2025, it employed 24,236 people and operated 229 stores in Russia, generating 127 billion roubles ($1.5 billion) of sales in the first half of 2026.

Unlike many Western companies, Auchan did not leave the Russian market after the 2022 invasion.

WHO IS TAKING CONTROL?

The decree names L.E.V. Management as temporary administrator of the assets. The Moscow-based company was registered in 2024 and has a limited public profile.

The Kommersant newspaper previously reported that a company called KS Logistika had asked the Kremlin to place Nestle's Russian assets under temporary administration.

WHY WAS NESTLE TARGETED?

That remains unclear, although Kremlin spokesman Dmitry Peskov said on Friday both companies were based in "unfriendly" countries — without naming Switzerland or France.

Russia has become increasingly critical of neutral Switzerland's stance on the Ukraine war, after Bern adopted most of the European Union's sanctions against Moscow.

Kommersant previously said Nestle was in Moscow's crosshairs because of a reluctance to expand its Russian operations and resume exports of goods produced in Russia.

The decree may be intended to pressure Nestle into reinvesting in Russia. It could also be a step towards forcing the company to exit, requiring it to pay a substantial exit tax and sell the business at a discount to a Kremlin-approved buyer.

HOW DOES TEMPORARY ADMINISTRATION WORK?

Russia created the mechanism in 2023 through a presidential decree allowing the state to place assets owned by companies from countries deemed "unfriendly" under temporary administration. Ownership is not formally transferred at this stage, but the state-appointed manager assumes control of the assets.

HOW HAS RUSSIA USED THIS SINCE THE WAR?

Since the war began, Moscow has used the mechanism against several foreign-owned businesses, including the Russian operations of French food group Danone, brewer Carlsberg and energy company Fortum.

In several cases, temporary administration was followed by sales to Russian buyers with links to the Kremlin. Russia has also tightened exit requirements for foreign companies, imposing mandatory discounts, exit taxes and other restrictions on asset sales.

($1 = 84.0698 roubles)

(Reporting by Cian Muenster and John Revill. Editing by Adam Jourdan and Mark Potter)