Tag: Megapolis

  • Russia Sues Dutch Owner of Megapolis

    Russia Sues Dutch Owner of Megapolis

    Image: somemeans

    The Russia government is seeking to suspend the corporate rights of Megapolis Distribution, the Dutch owner of Russian tobacco distributor Megapolis Group, reports Interfax.

    On July 18, Russia’s Industry and Trade Ministry filed a lawsuit against Megapolis Distribution in the Arbitration Court of the Moscow Region, according to records.

    The Russian company was earlier included in Russia’s list of economically significant organizations.

    The court has agreed to hear the lawsuit, and the first hearing is scheduled for August 8.

    Shortly after Russia’s invasion of Ukraine in February 2022 and just before the EU imposed sanctions on him, Russian billionaire Igor Kasaev, who owns 40 percent of Megapolis, funneled €8 million ($8.71 million) through the Netherlands, according to the NL Times.

    Kasaev is known to have ties to the Kremlin and the Russian arms industry. He keeps his shares in Megapolis, the largest distributor of cigarettes in Russia, in the letterbox company registered in The Hague. The sanctions froze Kesaev’s assets in his Hague company, “trapping” some €650 million in assets in the Netherlands.

  • Russian Tobacco Mogul Sanctioned

    Russian Tobacco Mogul Sanctioned

    Photo: Natalia Merzlyakova

    The United States has sanctioned Igor Kesaev, co-owner of the Mercury group, which manages Megapolis, a major Russian tobacco distributor, reports Interfax.

    Listed by Forbes as Russia’s 35th-richest person last year, Kesaev’s holdings have included a major stake in the V.A. Degtyarev factory, which makes machine guns, anti-tank and anti-aircraft weapons, some of which have been used in Ukraine, according to Metro.

    Until April 2022, Kesaev was also chairman Megapolis.

    Kesaev’s involvement in tobacco dates to the early 1990s. As the Soviet Union broke up into its constituent republics, he started an importing business that worked with international tobacco companies eager to get their products into the Russian market, according to a 2014 profile of the magnate published on Forbes’ Russian website.

    Over time, Kesaev built the largest tobacco distributor in Russia through acquisitions of regional competitors, according to Forbes’ Russian website. By 2022, Megapolis delivers to 160,000 retailers across the country, according to the firm’s website.

    Kesaev has also been involved with the tobacco business in Ukraine. Following the toppling of Ukraine’s pro-Russian president, Viktor Yanukovych, in 2014 and Russia’s subsequent annexation of Crimea, Ukrainian officials began scrutinizing the role of Russian companies in various sectors of its economy.

    At the time, Trading Company Megapolis-Ukraine controlled 99 percent of Ukraine’s tobacco distribution market, according to research from the Anti-Monopoly Committee of Ukraine.

    Kyiv sanctioned Kesaev in 2016 for unspecified actions that it said threatened Ukraine’s national security. A top Ukrainian prosecutor later accused Kesaev of supporting “terrorist organizations” by supplying arms to Russian-backed separatist groups that have been fighting for nearly a decade to carve out two independent states—Donetsk and Luhansk—in eastern Ukraine.

    Kesaev has also been sanctioned by the EU and the U.K. for aiding Russia’s invasion of Ukraine.

  • Fortuna Possible New Owner Imperial’s Russian Business

    Fortuna Possible New Owner Imperial’s Russian Business

    Photo: ASDF

    Fortuna Cigar House (FCH) could become the new owner of Imperial Brands’ Russian business, according to an Interfax report citing the Kommersant newspaper.

    Following Russia’s military invasion of Ukraine, several tobacco companies said they would scale back their operations in Russia. On April 20, Imperial Brands announced the transfer of its Russian business to local investors, subject to finalization of the registration of the transaction with local authorities. The company estimates a noncash write-off of around £225 million ($279.86) for this transaction.

    Founded in Odessa in 1999, FCH has been operating in Russia since 2011 as a joint venture with the distributor Megapolis, which was previously associated with Russian tobacco mogul Igor Kesaev. The company sells cigars, tobacco, smoking accessories and materials and equipment. It also has its own retail outlet.

    According to SPARK-Interfax, 50.01 percent of FCH belongs to Megapolis, and 49.99 percent belongs to BVG Cigar House Fortuna of Cyprus. In 2021, FCH posted revenue of RUR4.09 billion ($67.12 million) and a net profit of RUR404 million.

    In March, Imperial Brands said it was suspending operations in Russia, including production at its factory in Volgograd, as well as sales and marketing. The company then began talks with a Russian legal entity on transferring the business.

    Imperial Brands operates in Russia through Imperial Tobacco Volga, the production entity, and Imperial Tobacco Sales and Marketing. The company has held around 5.5 percent of the Russian tobacco market, according to business analysts cited by Kommersant.

    Tobacco analysts Maxim Korolyov told Kommersant that Imperial Brands’ products will likely continue to be produced in Russia under a temporary license.

  • Russian Tobacco Mogul Faces Scrutiny

    Russian Tobacco Mogul Faces Scrutiny

    Photo: GAlexS

    Metro published a profile of Russian tobacco mogul Igor Kesaev, who has been sanctioned by the EU and the U.K. for aiding Russia’s invasion of Ukraine.

    Listed by Forbes as Russia’s 35th-richest person last year, Kesaev’s holdings have included a major stake in the V.A. Degtyarev factory, which makes machine guns, anti-tank and anti-aircraft weapons, some of which have been used in Ukraine, according to sources.

    Until recently, Kesaev was also the board chairman of Russia’s leading tobacco distributor, TC Megapolis. Kesaev resigned from the board on April 11, 2022, according to a Russian-language press release, which stressed that Megapolis was not subject to EU sanctions and Kesaev did not influence the company’s business.

    Kesaev’s involvement in tobacco dates to the early 1990s. As the Soviet Union broke up into its constituent republics, he started an importing business that worked with international tobacco companies eager to get their products into the Russian market, according to a 2014 profile of the magnate published on Forbes’ Russian website.

    Russia was—and continues to be—an attractive market for international tobacco companies, with its large population of around 145 million people and one of the highest smoking rates in the world. More than 40 percent of men there light up, according to the World Health Organization.

    According to the Forbes profile, Kesaev graduated from Russia’s prestigious Moscow State Institute of International Relations. In the 1990s, he lived in Switzerland, where he developed personal connections with executives at Philip Morris International’s regional headquarters in Lausanne.

    Over time, Kesaev built the largest tobacco distributor in Russia through acquisitions of regional competitors, according to Forbes’ Russian website. Today, Megapolis delivers to 160,000 retailers across the country, according to the firm’s website. In 2013, PMI and Japan Tobacco International both purchased 20 percent stakes in Megapolis’ holding company for $750 million each.

    Kesaev has also been involved with the tobacco business in Ukraine. Following the toppling of Ukraine’s pro-Russian president, Viktor Yanukovych, in 2014 and Russia’s subsequent annexation of Crimea, Ukrainian officials began scrutinizing the role of Russian companies in various sectors of its economy.

    At the time, Trading Company Megapolis-Ukraine controlled 99 percent of Ukraine’s tobacco distribution market, according to research from the Anti-Monopoly Committee of Ukraine.

    Kyiv sanctioned Kesaev in 2016 for unspecified actions that it said threatened Ukraine’s national security. A top Ukrainian prosecutor later accused Kesaev of supporting “terrorist organizations” by supplying arms to Russian-backed separatist groups that have been fighting for nearly a decade to carve out two independent states—Donetsk and Luhansk—in eastern Ukraine.

  • PMI and JTI acquire stakes in Russian distribution firm

    Photo: scaliger

    Philip Morris International and Japan Tobacco International are acquiring equity stakes of 20 percent each in Megapolis Distribution, the holding company of CJSC TK Megapolis, a major distributor in Russia.

    The companies are paying $750 million each for their stakes. If Megapolis’ operational performance meets certain benchmarks during the four fiscal years following the closing of the agreement, PMI and JTI will each pay an additional $100 million.

    Megapolis is one of Russia’s leading consumer goods distributors focusing principally on tobacco and beverages. It employs almost 15,000 employees and commands a direct store delivery system that reaches more than 150,000 points of sale. Megapolis handles approximately 70 percent of the cigarettes sold in Russia through its distribution agreements with PMI, Japan Tobacco International and Imperial Tobacco Group.

    “We are delighted to reach this agreement with Megapolis, our proven distribution partner, which will support our business expansion in this profitable market,” said Miroslaw Zielinski, PMI’s president, Eastern Europe, Middle East & Africa Region and PMI Duty Free.

    “Megapolis has been our partner since 2007 and has contributed to JTI’s success in the important Russian market,” commented Kevin Tomlinson, JTI’s regional president, commonwealth of independent states. “This acquisition will strengthen their distribution platform allowing us to implement our growth strategy in the region more efficiently and effectively.”