Perry Neumann has been with Kuehne+Nagel for around 16 years, lately in the role of President Cluster Russia + CIS. Soon, however, the German national will become his own boss following a management buyout for an undisclosed amount. The initiative is a consequence of Kuehne+Nagel’s decision to divest its Russia business, as many other western companies have already done. Given the current circumstances and the withdrawal of most western logistics players from the Russian market, Mr. Neumann seems to be an ideal candidate for the takeover, both from a business as well as a political perspective.
The message aired by Kuehne+Nagel last week consists of only three paragraphs. It reads: “Kuehne+Nagel signed an agreement on June 3, 2022, to sell its business in the Russian Federation to its local Managing Director.”
It goes on to say: “This follows Kuehne+Nagel’s announcement on March 1, 2022, to temporarily suspend all shipments to/from the Russian Federation, except for pharma, healthcare, and humanitarian supplies.” Closing of the transaction is still subject to approval of the competent local merger control authority, Kuehne+Nagel concludes.
Mr. Neumann is based in the company's Moscow headquarters, 14 Olimpiyskiy Street, and – if all goes according to plans – will soon be responsible for 18 stations scattered across Russia. Among them are offices at the country’s most important airports, both located in Moscow: Sheremetyevo and Domodedovo. Hence, air freight has been a major contributor to sales generated by Kuehne+Nagel in Russia – until Putin’s Ukraine assault, leading to a multitude of flight bans and crippling Russian passenger and cargo airlines. However, because of the changed framework conditions, keyword: western sanctions, the new company managed by Mr. Neumann will concentrate more on overland transports. This applies to internal Russian trucking services but includes a network spanning into most CIS countries, namely Kazakhstan, Uzbekistan, and Azerbaijan. Links to the Middle East are also an option.
The company does not have a new name at present, especially as the Russian authorities still have to give their final approval to the management buyout."We can't announce our new company name until the deal is approved by tax authorities," Mr. Neumann told CargoFrowarder Global. "[This] will take a few more weeks." Apart from Mr. Neumann, no other potential investors are known.
Exiting the Russian market is bearable for Kuehne+Nagel
Kuehne+Nagel has been active in the Russian market since 1992. Currently, the logistics company employs roughly 1000 people in 18 Russian cities. Next to offices, it runs warehouses offering storage space of 144,000 m² for the handling and storing of goods.
In economic terms, the withdrawal from Russia does not tear a hole in the logistics giant’s pocket. Kuehne+Nagel's total sales in the entire region account for less than 2% of its yearly net earnings, which is also due to the fact that the Group has always relied on containerized transports in sea freight. In contrast to some other players, it has not been involved in the gas and oil business, which is paramount for the Russian economy and the national budget but now hit by sanctions.
A buyback deal is not excluded, experts hold
The forthcoming deal, as mentioned above, offers significant advantages for the parties involved. Kuehne+Nagel no longer needs to pay the salaries of the staff working in Russia, who have little to do at the moment. The Neumann accord is an elegant solution for the continued operation of Kuehne+Nagel’s activities although under different ownership structure for the time being. However, strategically particularly important: once the Putin-sparked war in Ukraine is over and a diplomatic solution is reached, Kuehne+Nagel could launch a buyback campaign and take over the network again. This option, market observers believe, is part of the agreement between the logistics provider and Mr. Neumann. "Whether Kuehne+Nagel will be interested in buying back my company at some point in the near or distant future? KN will have to comment on that. I can't answer that," the manager replied when asked by CargoForwarder Global. A statement that at least does not rule out the option of a buyback. At the logistics giant nobody was available for comment.
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