IKEA completes sale of Russian factory to local firm

Swedish furniture giant IKEA said on March 27 it had sold its factory in the Russian city of Novgorod to local firm Invest Plus, more than a year after pausing its activities in Russia over the conflict in Ukraine.

IKEA halted all retail and production operations in Russia soon after Moscow sent troops into Ukraine on February 24, along with scores of other Western companies. IKEA briefly resumed online sales last summer and part of the company still operates 14 MEGA-branded shopping malls in Russia, according to Reuters.

Local media in February reported that Ingka Group, the owner of most IKEA stores, had started looking for buyers for the malls.

"The (Novgorod factory) sales process has been structured and stepwise in order to find a new owner with a strong plan and capability to develop the business," brand owner Inter IKEA Group told Reuters.

The parties did not disclose the sum of the deal nor details regarding its terms.

"The process of concluding the deal was not easy and quite lengthy," Invest Plus CEO Vadim Osipov said in a statement, thanking all parties involved - IKEA, Russian and Swedish regulators, and Russia's Ministry of Industry and Trade.

"Our goal is to return the highly popular and quality production of the Novgorod factory to Russia's furniture market as quickly as possible," Osipov said.

Exits by Western companies have been complicated as deals involving firms from so-called unfriendly countries - those that imposed sanctions against Russia - need approval from a government commission.

Invest Plus is a special purpose vehicle (SPV), beneficially owned by Osipov, who is CEO and co-owner of Slotex, a leading domestic producer of laminates and kitchen worktops.

The Russian government approved the sale to Slotex in February, also giving lumber manufacturer Luzales the right to finalise a deal for two other plants.

The Novgorod factory was the largest of IKEA's former production units in Russia, Invest Plus said, able to produce more than 7 million cabinets and kitchen furniture units per year.

The company has retained the backbone of the factory's workforce and said it would guarantee jobs for at least a year. It expects to resume full production in the next two to three months.