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British American Tobacco Completes Russia Exit, Selling to Local Managers

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British American Tobacco Finalizes Exit from Russia with Sale to Local Managers

British American Tobacco (BAT) has successfully completed its exit from Russia, following through on its commitment made 18 months ago in response to Moscow's invasion of Ukraine. In a statement released on Thursday, the multinational cigarette maker announced that it has agreed to sell its Russian and Belarusian businesses in compliance with local and international laws. While the financial terms of the deal were not disclosed, the transaction is expected to be finalized within a month.

Withdrawal from Russia

Since Russia's invasion of Ukraine in early 2022, numerous companies, including Apple, McDonald's, and Coca-Cola, have pulled out of the Russian market. However, some global tobacco giants, such as Japan Tobacco International and Philip Morris International, continue to conduct business in the country. BAT, headquartered in London, is a major player in the global tobacco market, operating in over a hundred countries and boasting renowned brands like Camel and Newport. In Russia, BAT held nearly 25% of the tobacco market, making it the fourth-largest market worldwide.

Sale to Local Managers

The buyer of BAT's Russian and Belarusian businesses is a consortium led by members of BAT Russia's management team. Following the completion of the deal, they will assume full ownership and the businesses will be known as the ITMS Group. BAT has assured that the employment terms of workers in Russia will remain comparable to their existing terms for a minimum of two years after the deal concludes. In conclusion, British American Tobacco has finalized its exit from Russia by selling its Russian and Belarusian businesses to a consortium led by local managers. This move aligns with BAT's commitment made in response to the conflict between Russia and Ukraine. As BAT withdraws from the Russian market, it joins the ranks of other multinational companies that have chosen to discontinue operations in the country.

Conclusion: Implications for New Businesses

The decision by British American Tobacco (BAT) to exit Russia offers a 'hot take' for new businesses, particularly those with international operations or aspirations.

Business Ethics and Global Politics

BAT's exit, in response to Russia's invasion of Ukraine, underscores the importance of business ethics and the influence of global politics on business decisions. New businesses must consider these factors when planning their international operations.
Market Exit Strategy
The sale of BAT's Russian and Belarusian businesses to local managers highlights the necessity of a well-planned exit strategy. This is particularly relevant in volatile markets or regions with political instability.
Employee Protection
BAT's assurance of comparable employment terms for workers post-sale emphasizes the responsibility businesses have towards their employees, even in challenging circumstances. In conclusion, BAT's exit from Russia provides valuable insights for new businesses. It underscores the importance of business ethics, the influence of global politics, the necessity of an exit strategy, and the responsibility towards employees. As businesses navigate the global market, these considerations will be crucial in their strategic planning and decision-making processes.
Story First Published at: https://www.cnbc.com/2023/09/07/british-american-tobacco-finalizes-russia-exit.html
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