Yandex struck a 475 billion ruble ($5.21 billion) deal to sell its so-called “Russian Google” to a group of Russian investors; That was the biggest market cap since Moscow’s Ukrainian crackdown on the country’s businesses nearly two years ago.
The Kremlin’s planned deal would ensure Russian ownership of Russia’s largest technology company, whose capital is eventually held by oil giant Lukoil, and solidify Yandex’s position outside Western tech circles.
Nasdaq-listed Yandex, once seen as one of the few Russian companies with the potential to become a global player, has developed online services such as search, advertising and ride-hailing in Russia.
In August, the founder of Arkady Volozh, who moved to Israel from Russia in 2014, called Russia’s invasion of Ukraine “barbaric,” leading some in the Kremlin to push for the nationalization of Yandex.
But in the end, brain training concerns helped dash this hope, and a difficult agreement was reached according to which Yandex’s business, which accounts for more than 95% of its revenues, would be located in and controlled by Russia.
The Kremlin welcomed the deal and has been in talks with Yandex for about 18 months to separate its Russian business from its Dutch parent Yandex NV.
Yandex has tried to portray itself as a bulwark against the Kremlin’s power; This task became more difficult as the company became a national entity.
According to the three-month weighted average of shares on the Moscow Stock Exchange, the value of the deal is $ 10.2 billion in Yandex. At the end of 2021, that is, before the Russian invasion,
Yandex’s market value was close to 30 billion dollars.
Yandex NV said the sales price reflected “the need for a discount of at least 50 percent to a ‘reasonable price’.” The Russian government must approve the transaction involving the sale of foreign assets and provide a discount of at least 50 percent.
Almost 88% of Yandex’s membership base is now free-floating, with many Western accounts among its members.
Yandex NV said in a statement that the contract will include at least 230 billion rubles of equity capital and up to 176 million Yandex NV Class A shares.
“Cash payment will be paid in Chinese yuan (CNH) outside Russia,” Yandex NV said, adding that the use of the Yandex name will cease after the transaction is completed.
‘Special status’
Buyer, Consortium.First, is a new investment managed by agency Product Management. The plan is led by members of Yandex’s senior management team in Russia and is backed by four investors, including Lukoil-owned Argonaut.
Three other companies – Infinity Management, IT.Elaboration and Meridian-Servis, owned by Alexander Chachava, Pavel Prass and Alexander Ryazanov respectively – are also among the buyers.
Yandex NV made it clear that none of the relevant group members are subject to US, EU, UK or Swiss sanctions. Sources told Reuters the offer was already being considered by other Russian buyers.
After receiving approval from regulatory authorities and shareholders, the sale will be completed in two phases, with the first phase expected to be completed in the first half of 2024 and the second phase within seven weeks.
Yandex NV plans to delist its Class A shares from the Moscow Stock Exchange, possibly after Yandex receives a new public listing.
Yandex NV chairman of the board John Boynton said the team found the best solution for business owners and users in “unusual situations”.
Yandex NV will keep four early technology businesses, information solutions, autonomous driving and learning technology in the cloud space.
It will also retain the “core assets” of its data center in Finland, as well as 1,300 employees, under a transfer license until 2024.
In a letter to Russian employees, Yandex officials wrote that the main responsibility is to: By destroying its content, we guarantee that Yandex will remain independent.
