Moscow: Yandex NV, often hailed as “Russia’s Google”, has inked a groundbreaking deal worth 475 billion roubles ($5.21 billion), selling off its major businesses to a consortium of Russian investors, reports Reuters.
This momentous transaction marks one of the most significant corporate exits from Russia since Moscow’s incursion into Ukraine nearly two years ago, signifying a notable shift in the country’s tech landscape.
Navigating a Complex Exit Strategy: Yandex’s Tumultuous Journey
Once envisioned as a potential global powerhouse from Russia, Yandex’s trajectory took a complicated turn following co-founder Arkady Volozh’s outspoken condemnation of Russia’s invasion of Ukraine in August 2023. This ignited talks of potential nationalization of Yandex, driven by concerns over a potential brain drain in the technology sector.
Despite Yandex’s efforts to assert its independence from Kremlin influence, the company evolved into a pivotal national asset, necessitating intricate negotiations with the Russian government.
Market Capitalization Plunge: A Drastic Reassessment
The deal values Yandex at $10.2 billion, marking a significant drop from its market capitalization of nearly $30 billion in late 2021 before geopolitical tensions escalated. This reflects a mandatory discount of at least 50% to ‘fair value,’ adhering to Russian regulations governing foreign asset sales.
Cash Consideration and Brand Transition
Under the terms of the agreement, Yandex NV will receive a cash equivalent of at least 230 billion roubles and approximately 176 million Yandex NV Class A shares. Notably, the cash payment will be transacted in Chinese Yuan (CNH) outside of Russia. Furthermore, following the completion of the deal, Yandex NV will undergo a rebranding, discontinuing the use of the Yandex brand, marking a significant departure for the once-prominent tech entity.
Consortium.First: Unveiling the Buyer and Key Players
Consortium.First, the buyer consortium, emerges as a newly-formed investment fund helmed by trustee Solid Management, led by prominent members of Yandex’s senior management team in Russia. The consortium garnered support from financial investors, including Argonaut, a fund ultimately owned by Lukoil. Notably, none of the consortium members are under US, EU, British, or Swiss sanctions, ruling out other potential Russian buyers.
Completion Stages and Strategic Retentions
Pending regulatory and shareholder approval, the sale will be executed in two phases, with the first phase anticipated to conclude in the first half of 2024. Following this, Yandex NV intends to delist its Class A shares from the Moscow Exchange upon securing a new public listing. Despite the divestiture of its major assets, Yandex NV will retain a select portfolio of four early-stage tech businesses, a data center in Finland, and crucial intellectual property assets, underlining its commitment to specific technological sectors.
Yandex’s Pledge to Employees: A Message of Continuity
In a letter addressed to Yandex employees in Russia, company management reiterated their dedication to preserving the essence and independence of Yandex. Assuring employees of continued autonomy despite the impending changes, Yandex NV reaffirmed its commitment to maintaining its status as an independent entity.
