Julia Talagaeva comments on M&A market in Saint Petersburg and Leningrad Region, for Delovoy Peterburg newspaper

Generally, the M&A market of Saint Petersburg and Leningrad Region has been following all-Russian trends. Regional businesses are looking for access to international markets, adapting to local demand, and are expanding to other Russian regions.

Businesses are also developing and redistributing the assets inherited from the foreign companies that have left and are still leaving the Russian market, but this is rather a fading trend. Modern challenges have also had their impact on the M&A market—e.g., digitalization, which manifests itself, in particular, in the interest in IT companies that has sparked in recent years.

Among the notable transactions in the M&A market in Saint Petersburg and Leningrad Region, experts name the purchase of the assets of the Finnish Metsä Group by Vologodskiye Lesopromyshlenniki Group. As Delovoy Peterburg reported in May, the transaction encompassed the lease base of Metsä Forest Podporozhye LLC with logging operations and a sawmill, Metsä Svir LLC, and Metsä Forest Podporozhye LLC. The new owner’s plan is to restart the Metsä regional plant. According to experts, the transaction value, with account taken of the discount, could be up to €10 million.

Traditionally, a significant number of Finnish, German, and Swedish investors were present in the forestry industry of Russia’s North-West.

“The sale of Russian assets by these investors reached its peak in 2023,” said Julia Talagaeva. “But even now, the remaining foreign holdings may decide to leave due to increased pressure on them from the European Union and the United States, and the risk of introducing external administration on their Russian assets.”

The activity of foreign sellers is affected by the tightened conditions for obtaining authorizations from the Russian Government Commission for transactions. In October, the minimum discount for the sale of a company was once again upped from 50% to 60% of the market value, and a voluntary contribution payable for the sale of a company was increased to 35% of its market value, as compared to 15% earlier.

“In view of this, foreign sellers, in addition to the financial terms of transactions, are paying more and more attention to a potential buyer’s ability to obtain authorization from the Russian Government Commission (the buyer is more likely to obtain such authorization, if the buyer operates in in the same or related industry) and the buyer’s waiver of the seller’s guarantees in relation to the company after the closing of the transaction,” said Julia Talagaeva.

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