Putin takes control of three more Japan Tobacco units

Russian President Vladimir Putin has put three more Russian units of Japan Tobacco International (JTI) under temporary state-appointed management. The move came one day after he took control of the group's four Russian manufacturing businesses. The second decree was signed on Friday, Nov. 6, and published overnight, Reuters reported. The new entities go to the same manager as the factories, JSC Industrial Assets, Bloomberg reported.reuters.com+1

Together, the two orders hand Moscow control over almost all of the Russian operations of Japan Tobacco. Russia is a major market for the company, bringing in about 10% of group revenue and roughly 25% of its operating profit, Reuters reported.reuters.com

What the new decree covers

The three companies added on Friday are all owned by JTI Investments Sarl. According to Interfax, as cited by Reuters, they handle imports, management and holdings. NHK reported that the assets include shares of the Russian affiliate Pereslavl-Tobacco. Citing Zona.media, RBC-Ukraine named the other two entities as J.T.I. Russia and J.T.I. Innovative Products.newsukraine.rbc.ua+2

The first order, signed on Thursday, Nov. 5, covered JTI Donskoy Tabak, Petro, JTI Yelets and Kres Neva, Interfax reported. These businesses run cigarette and tobacco-processing plants in St. Petersburg, Yelets and Rostov-on-Don. Interfax said this was the first time Russia had used the temporary management mechanism on a tobacco company.interfax.com

Russian outlet RBC quoted Anton Pivovarov, head of Industrial Assets, as saying the company would try to keep production running, keep existing teams in place and meet its obligations to employees and partners, Reuters reported. The Moscow Times reported that this Industrial Assets was registered on Sept. 16 and is owned by Sergei Dremov, a former officer of the FSB security service in the Kursk region.reuters.com+1

Tokyo protests, shares fall

Neither decree gave a reason for the takeover. Japan's government has protested and asked Russia to withdraw the order. "We have already protested through diplomatic channels and requested that the measure be withdrawn," Finance Minister Satsuki Katayama said, according to Reuters. The Japanese government owns about 37% of the company. Japan Tobacco shares fell sharply on Friday after the first decree, Bloomberg reported.bloomberg.com+1

JTI said it was "assessing the situation and our options, prioritising our stakeholders, most notably our employees," according to Reuters.reuters.com

A widening takeover policy

Russia created the temporary management system in 2023. It was a response to Western and allied countries, which Moscow calls "unfriendly," freezing Russian assets after the invasion of Ukraine. Under the system, foreign companies keep legal ownership of their assets but in practice lose control of management, Jiji Press reported. Putin has called such seizures a matching response to Western sanctions. He has said control could be handed back under favorable conditions, according to the Moscow Times.nippon.com+1