French automotive parts manufacturer, Valeo, has taken a significant step in its decision to divest its production activities in Russia. The company announced today that it has signed an agreement with NPK Avtopribor for the sale of all of Valeo’s production assets related to its Thermal Systems business in Russia. This move comes as part of Valeo’s strategic restructuring plan and the company’s commitment to adapt to evolving global market dynamics.
According to Valeo’s official statement, the sale of its thermal systems production assets in Russia to NPK Avtopribor will not incur any capital gain or loss. However, it is important to note that the transaction’s completion is subject to obtaining the necessary regulatory approvals. This development has been well-received by Valeo’s stakeholders as it not only aligns with their strategic goals but also ensures the job security of the 124 Russian employees involved in this business. Valeo will also retain a buyback option for the next ten years, which can be activated from the sixth year onwards, giving them the flexibility to re-enter the market in the future if conditions allow.
Valeo’s decision to divest its Thermal Systems business in Russia follows a similar announcement made on August 18, 2023, when the company sold its transmission systems business in the country to NPK Avtopribor. The series of divestitures signify Valeo’s complete withdrawal from its industrial operations in Russia. It’s worth noting that Valeo’s sales in Russia represented less than 1% of the group’s total sales. Additionally, the assets being divested were already accounted for in the company’s books in 2022, with a total depreciation amounting to 43 million euros ($47 million).
This strategic shift underlines Valeo’s commitment to focusing on its core business operations and optimising its global footprint. While it represents a significant change for the company, it is expected to streamline operations and resources, aligning Valeo with the evolving dynamics of the automotive industry.