Mercedes-Benz Could Lose $2.2 Billion In Assets To Russian Nationalization

Mercedes-Benz Could Lose $2.2 Billion In Assets To Russian Nationalization

It’s safe to say that Russia’s economy is in tatters due to its invasion of Ukraine. The imposition of economic sanctions and the departure of Western corporations has triggered a downward spiral. The Russian government is now moving to seize foreign-owned assets to keep the county’s economy somewhat afloat. One of the largest companies under threat is Mercedes-Benz.

United Russia, the political party ruling Russia and led by Vladimir Putin, has put out a statement claiming that a government commission approved a bill to nationalize assets within the country’s borders from corporate entities that are more than 25 per cent foreign-owned. If the bill passes into law, the companies affected would be put into a temporary three-month administration.

To avoid being put into administration, the company would have to resume business operations in Russia or sell its assets in Russia. If three months pass and no action is taken, the nationalized assets would be formed into a new company and its shares auctioned off.

This week, Mercedes-Benz in its annual report stated that the manufacturer’s operations were at risk by the invasion of Ukraine. Apart from supply issues, the German company noted that $US2.2 ($3) billion in assets held by its Russian subsidiaries could be “expropriated.” The German automaker has a production facility in Russia, 40 km northwest of Moscow. Mercedes-Benz ceased production at the factory as well as stopped vehicle exports into Russia in response to the invasion of Ukraine.

United Russia also stated, “This will prevent bankruptcy and save jobs.” While it is unfortunate that factory workers are currently out of a job, the Russian government knows what it needs to do for the international community to ease sanctions on the country. Though, the Kremlin rather take an option further to deepen the economic schism between Russia and the West as it continues its invasion of Ukraine.

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