S. Korea's food producer Paldo acquires GBfoods' Russian operation

South Korea’s food company Paldo Co., a holding firm behind hy Co. known for its fermented milk drink, has acquired the Russian operation of Spain’s global food producer GBfoods in a bid to cement its foothold in its biggest overseas market and expand outreach to neighboring countries.

Paldo on Tuesday disclosed it had signed a deal to buy GBfoods’ business in Russia to expand its product lineups in Russia, Paldo’s biggest overseas market. The financial term is not disclosed. The Russian operation of GBfoods last year raised 36 billion won ($25.38 million) in sales.

Paldo’s acquisition of GBfoods’ Russian operation comes while multinationals are abandoning Russia after its invasion of Ukrain.

McDonald’s and Starbucks exited from Russian, and GBFoods is joining the western society move.

The Spanish firm is an international group of culinary products with a presence in eight countries in Western Europe, Russia and the Commonwealth of Independent States (CIS), and 30 countries in Africa. It decided to sell the Russian operation due to the weakening of the Russian currency, commodity price hikes, and concerns about global economic recession since the war.

Paldo, however, sees Russia as a gateway to other foreign markets in longer-run outlook. Russia takes the biggest chunk of the firm’s overseas sales, with its Russian operation reaping 300 billion won in annual sales last year. Its instant cup noodle took the largest share of 60 percent in the market.

Following the acquisition, the Korean food producer is expected to use its brand power in Russia to make inroads into neighboring CIS members, including Armenia and Azerbaijan.

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