German retail chain faces mutiny from Russian employees

RT
Tue, 12 Apr 2022 17:39 UTC

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German-owned DIY hardware store OBI

Local OBI employees tried to take over the business from within in an open rebellion

The Russian management of German DIY retailer OBI have rebelled against the parent company over its decision to leave the country, business daily Vedomosti reported on Sunday.

The majority shareholder of the chain - the German holding OBI GmbH - announced that it was shutting up shop in Russia on March 8, joining hundreds of other foreign companies that decided to pull out amid Western sanctions. According to Vedomosti, the decision provoked an open confrontation between the local management of the chain and the parent company.

Despite the closure announcement, OBI stores remained open across Russia for nine more days, until March 17. In late March, procurement director of OBI Russia, Maxim Suravegin, announced that all of the chain's stores would reopen within two weeks, after the company had dealt with "a technical glitch." The parent company in Germany dismissed this as speculation and restated that the stores would remain "permanently" closed, "contrary to reports from Russia."

According to Vedomosti, the German owners blocked the IT system that enabled operations in its Russian subsidiaries, cutting the staff off from personal email, servers, and cash registers. "The team is now fighting to continue operations in Russia," an ex-sales director of OBI Russia told Vedomosti.

Among the possible solutions to the problem, the outlet said, is the sale of local assets by the German holding to a third party or to the top Russian managers of the chain. According to the newspaper's sources, the majority shareholder was ready to sell its stake for a nominal price of €1 ($1.09), but the deal fell through because the foreign management left Russia. Other options would be to transfer the business into Russian trust management, or liquidation.

OBI in Russia is undergoing a "monstrous experiment" - a "self-capture of the business by the management and nationalization from within," said Ivan Fedyakov, director of the market research agency INFOLine, who believes that a new legal entity will be able to use the OBI brand, seal new supply contracts, and leave debts to old legal entities.

OBI entered the Russian market in 2003, opening 27 stores across the country. According to business outlet RBC, as of early March, the chain employed nearly 4,900 people which constituted 10% of OBI's total staff worldwide. As of Tuesday, the OBI stores in Russia remain closed due to "technical reasons," according to an announcement on OBI Russia's website.

Comment: Further developments were reported by RT. As many predicted, those business who abandoned Russia would, in the end contribute to Russias domestic assets. From McDonalds to airlines, Russia will acquire ready-made domestic infrastructure. Up the workers!

The German DIY retailer OBI will transfer its Russian chain into trust management to be sold later, business daily Vedomosti reported on Tuesday. The decision follows several weeks of an open confrontation between the Russian management of the chain and the parent company.

The majority shareholder of the chain - the German holding OBI GmbH - announced a suspension of its business in Russia on March 8, along with hundreds of other foreign companies that decided to leave amid Western sanctions. The local management defied the decision of the parent company and stores remained open for another two weeks.

The trust management services will be provided by entrepreneur and consultancy owner Boris Lyuboshits, say Vedomosti. The chain will be later transferred to an investor who will develop it domestically and most likely gradually move away from the OBI trademark. The company's business profile and jobs will be preserved, the daily says, citing its sources. As a trustee, Lyuboshits will do due diligence on the retailer, check its accounts, compile an inventory of its assets, and later draw up a strategic and financial development plan to deal with the losses which, according to the market research agency INFOLine, amounted to roughly 5% of its revenue over the past two years.

OBI entered the Russian market in 2003, opening 27 stores across the country. According to business outlet RBC, as of early March, the chain employed nearly 4,900 people which constituted 10% of OBI's total staff worldwide.