NOKIA, Finland — The Russian Governmental Commission has approved the sale of Nokian Tyres P.L.C.'s tire plant in Russia to P.J.S.C. Tatneft.
Nokian Tyres made the announcement based on information the tire maker received from Tatneft, one of Europe's larger suppliers of synthetic rubber.
Nokian said the Russian Governmental Commission on Monitoring Foreign Investments set the total permissible transaction price at 23.1 billion rubles. It said, however, the actual exchange rate will determined by the Russian Central Bank on the day of payment will be applied.
According to the exchange rate on March 13, Nokian said the price approved by the Russian Governmental Commission would be about 286 million euro, or $307 million in U.S. funds.
When the deal was announced on Oct. 28, 2022, the transaction price announced was expected to be approximately 400 million euro, or $429 million in U.S. funds, with the final total based on, among other factors, net cash, working capital adjustments and changes in ruble-euro exchange rate.
Nokian said that "substantial uncertainties still remain related to the transaction and the timing of it as well as the exchange rate on the day of payment."
The tire maker said the final closing of the transaction is subject to the completion of compliance checks against recent changes in sanctions and money transfer, among others.
Nokian — which reports annual revenue from sales in Russia and Asia of around $378 million from the plant in Vsevolozhsk, Russia — was among first tire makers to react to Russia's invasion of Ukraine, announcing on Feb. 25, 2022 it had moved production of some of its key lines out of its plant in Russia to plants in Finland and the U.S., while securing "transport capacity from Russia with existing and new service providers."
The plant in Vsevolzhsk is rated at close to 16 million tires per year.
Last year, Tatneft it agreed to sell its tire business to J.S.C. Tatneftekhiminvest-Holding, an entity independent of Tatneft Group.
Nokian opened its Russian plant in 2005, and by 2021, the company said approximately 80% of the its passenger car tires were produced in Russia. Nokian said its business in Russia and Asia represented approximately 20% of its net sales.
Nokian has taken several steps in order to recoup capacity lost in Russia. Among them, the Finnish tire maker is expanding its plant in Dayton, Tenn.; and is building a $650 million plant in Romania.
Meanwhile, two other tire makers, Continental A.G. and Group Michelin, continue to work toward exiting the Russian market nine months after announcing their decisions to get rid of their operations in the country in the aftermath of Russia's invasion of Ukraine.
Continental said in its fiscal 2022 earnings report that it is pursuing a "controlled withdrawal" from the Russian market, which involves selling its business operations in Russia, including a tire plant in Kaluga.
Speaking at the firm's year-end financials press conference March 8, CEO Nicolai Setzer cited rising prices for goods, raw materials and energy that are tied to the war as reasons for the withdrawal.
Continental opened the factory in Kaluga in 2013. In March last year, the tire maker halted operations there following the breakout of the war.
Michelin said in its fiscal 2022 results that it is working on exit scenarios which includes a sale to a third party.
Documents show that Michelin still controls Russian subsidiaries, including the car and light truck tire plant in Davydovo.
The French tire maker suspended all of its industrial operations in Russia and exports to the country in March last year. At the end of June, it disclosed plans to exit Russia due to the "technical impossibility" of resuming operations, in particular due to procurement difficulties.
Michelin Russia employs around 1,000, including 750 at the Davydovo plant, which has a rated production capacity of 1.5 million to 2 million tires a year. That amount of output represents about 1% of the group's worldwide capacity.