Yandex NV, a technology company listed on Nasdaq, has announced a significant deal valued at 475 billion roubles ($5.21 billion). The deal involves the sale of all its assets in Russia to a consortium of Russian investors, which includes a fund ultimately owned by the major oil company Lukoil (LKOH.MM).
This transaction signifies a pivotal moment as it would result in Russia’s largest technology player, often referred to as “Russia’s Google,” transitioning entirely into Russian ownership. This move solidifies Yandex’s departure from the Western tech circles it once engaged with.
Yandex, known for developing leading online services such as search, advertising, and ride-hailing, was once considered one of the few Russian companies with global business potential until the geopolitical events, particularly Moscow’s invasion of Ukraine in February 2022.
Negotiations between the Kremlin and Yandex have spanned approximately 18 months, aiming to separate Yandex’s Russian businesses from its Dutch parent company, Yandex NV.
The complexity of the deal arises from Yandex being a strategically important asset for Russia, predominantly owned by Western investors. While Yandex NV would achieve one of the largest corporate exits from Russia since the onset of the war, over 95% of Yandex’s revenues would remain in Russia under Russian control.
The sale price, reflecting a “mandatory discount of at least 50% to ‘fair value,'” requires approval from Russia’s government, which mandates a similar discount for foreign asset sales.
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Yandex’s market capitalization, based on a three-month weighted average for its shares on the Moscow Exchange, is calculated at $10.2 billion. In late 2021, prior to Russia’s invasion, Yandex’s market value had approached $30 billion.
Currently, almost 88% of Yandex’s ownership structure is free-float, with numerous Western funds among its shareholders.
As outlined in Yandex NV’s statement, the deal comprises a cash equivalent of at least 230 billion roubles and approximately 176 million Yandex NV Class A shares. The cash consideration will be paid in Chinese Yuan (CNH) outside of Russia. Moreover, Yandex NV will discontinue using the Yandex brand following the deal’s completion.
‘EXTRAORDINARY CIRCUMSTANCES’
The purchasing entity, Consortium.First, is a recently established investment fund overseen by trustee Solid Management. It was spearheaded by members of Yandex’s senior management team in Russia and received backing from four financial investors, including Argonaut—an investment fund ultimately owned by Lukoil. Additionally, three other companies, namely Infinity Management, IT.Elaboration, and Meridian-Servis, owned by Alexander Chachava, Pavel Prass, and Alexander Ryazanov respectively, were also part of the acquiring consortium.
Yandex NV explicitly stated that none of the consortium members are subject to U.S., EU, British, or Swiss sanctions, a prerequisite that excluded other potential Russian buyers, according to sources cited by Reuters.
Pending regulatory and shareholder approvals, the sale is slated to be finalized in two stages. The first stage is expected to conclude in the first half of 2024, with the subsequent stage following within seven weeks. Yandex NV intends to delist its Class A shares from the Moscow Exchange, a move anticipated after securing a new public listing.
John Boynton, the chairman of Yandex NV’s board of directors, expressed that the team identified the optimal solution for shareholders and users amidst “extraordinary circumstances.” Following the sale, Yandex NV will retain a portfolio comprising four early-stage tech businesses in cloud computing, data solutions, self-driving technology, and education technology. Additionally, it will keep possession of a data center in Finland and the “core intellectual property asset” maintained by 1,300 employees, along with transitional licenses extending through 2024.
In a communication to Yandex’s employees in Russia, the management emphasized their primary objective was to preserve the essence of the company, assuring that Yandex would maintain its independence despite the changes.
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