Yandex has agreed to sell what has been dubbed “Russia’s Google” to a group of Russian investors for 475 billion rubles ($5.21 billion), the largest corporate exit from the country since Moscow invaded Ukraine nearly two years ago.
Kremlin-engineered deal
The Kremlin-engineered deal would see Russia’s largest technology player fall completely under Russian control, including a fund eventually owned by oil major Lukoil, and would cement Yandex’s departure from Western tech circles.
Yandex, a Nasdaq-listed company, was once regarded as one of the few Russian companies with the potential to become a global business. In Russia, it developed leading online services such as search, advertising, and ride-hailing.
Co-founder, Arkady Volozh
Its co-founder, Arkady Volozh, who moved from Russia to Israel in 2014, slammed Russia’s invasion of Ukraine as “barbaric” in August, prompting some in the Kremlin to push for Yandex’s nationalisation, according to people familiar with the situation.
However, fear of a technology brain drain helped keep that prospect at bay, resulting in a complicated agreement in which Yandex businesses accounting for more than 95% of revenues would remain in Russia and come under Russian control.
The Kremlin, which welcomed the deal, has been in talks with Yandex for about 18 months to try to spin off the Russian businesses from Yandex NV, its Dutch parent.
Yandex’s market capitalization
Yandex has always sought to portray itself as free of Kremlin influence, a task that has become increasingly difficult as the company has grown into such a strategic national asset.
The deal values Yandex’s market capitalization at $10.2 billion, based on a three-month weighted average of its Moscow Exchange shares. In late 2021, prior to Russia’s invasion.
Yandex’s market capitalization had approached $30 billion.
Yandex NV stated that the sale price represents “a mandatory discount of at least 50% to ‘fair value'”. Russia’s government must approve deals involving foreign asset sales and requires a minimum discount of 50%.
Almost 88% of Yandex’s ownership structure is currently free-floating, with many Western funds among its shareholders.
Yandex NV said in a statement that the deal would include at least 230 billion roubles in cash and up to 176 million Yandex NV Class A shares.
“The cash consideration will be paid in Chinese Yuan (CNH) outside of Russia,” Yandex NV stated, adding that it would no longer use the Yandex brand after the transaction was completed.
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