Tatneft paying just 286 million euros for Nokian Tyres Russian assets

PJSC Tatneft reports that the Russian Governmental Commission on Monitoring Foreign Investments has approved Tatneft’s purchase of Nokian Tyres plc’s operations in Russia, a deal that was announced on 28 October 2022. That much was expected, some would say overdue. However, Nokian Tyres reports that Tatneft will only be paying around 286 million euros for company’s high-tech St. Petersburg factory and other local assets.

According to the resolution of the Russian Governmental Commission, the total permissible transaction price defined by the commission is 23,050 million rubles (285.316 million euros; £251.206 million; $305.658 million at the time of going to press). The precise RUB/EUR exchange rate as determined by the Russian Central Bank on the day of payment will be applied.

Whatever that official exchange rate turns out to be, the current price tag appears to be around 30 per cent lower than the 400-million-euro price originally suggested by Nokian Tyres and even lower than the top-end 1 billion euro valuation that could be attached to Nokian’s Russian operation, according to some market sources.

Nokian Tyres didn’t exactly explain why the price had dropped so much, but did say that they expected the original 400-million-euro-figure “to be affected, among other things, by net cash and working capital adjustments and changes in RUB/EUR exchange rate.” That, however, doesn’t explain either the original distance between value and price tag or the latest price cut.

And what’s more, Nokian Tyres representatives still concede that “substantial uncertainties” remain related to the transaction and the timing of it as well as the RUB/EUR exchange rate on the day of payment, adding: “the final closing of the transaction is subject to successful completion of compliance checks against the recent changes in sanctions and money transfer, among others”.