©Reuters. The logo of Russian technology giant Yandex is displayed at the company’s headquarters in Moscow, Russia, December 9, 2022. REUTERS/Evgenia Novozhenina/ file Photo
By Alexander Marrow
LONDON (Reuters) – $5.2 billion cash and stock deal to sell technology group’s key Russian operations Yandex (NASDAQ:), often labeled “Russia’s Google (NASDAQ:),” a consortium of Russian investors announced Monday after months of negotiations.
That’s why the agreement is significant.
THE LARGEST TECHNOLOGICAL RESOURCE IN RUSSIA
Moscow has long sought to gain more influence over Yandex, which was born in the dotcom boom of the late 1990s, becoming a key player in online services such as search and advertising, email, ride-hailing, e-commerce, cloud and streaming. .
The sale to a group of Russian investors would bring Yandex under the control of only Russian entities for the first time.
Yandex, listed on the Nasdaq in 2011 through its Dutch holding company Yandex NV, has a free float of almost 88%, with many Western investors among its shareholders.
“This is exactly what we wanted to achieve a few years ago, when Yandex risked being taken over by Western IT giants,” said Anton Gorelkin, deputy head of the Russian parliament’s information policy committee. “Yandex is more than a company, it is an asset of the entire Russian society.
“Yandex has become a full-fledged Russian IT company.”
Under pressure to meet Kremlin demands on content, Yandex sold its news aggregator and other online assets to state-controlled rival VK in late 2022, seeking to depoliticize its business. The company restructuring work then began.
CORPORATE EXIT
Since Russia invaded Ukraine in February 2022, dozens of foreign-owned businesses have exited the market, many of them abandoning their operations under unfavorable terms.
The Kremlin requires a discount of at least 50% on deals involving foreign owners, meaning that although Yandex largely serves the Russian market, it is still subject to such conditions.
The $5.2 billion deal is significantly lower than Yandex’s final value – its market capitalization briefly approached $30 billion in 2021 – but would be one of the largest deals since the war began .
Many companies have sold assets for a nominal amount, while Russian President Vladimir Putin has ordered the temporary seizure of others, such as assets belonging to Danone and Carlsberg (CSE:).
YANDEX FUTURE
Yandex executives stressed in a letter to employees that the company will remain independent.
The proposed new owners, Consortium.First, would be made up of senior management from Yandex, a fund controlled by oil major Lukoil and three other companies owned by businessmen Alexander Chachava, Pavel Prass and Alexander Ryazanov.
It was not immediately clear what influence the new Russian ownership might exert.
Lukoil did not immediately respond to a request for comment.
Reuters has requested comment from companies linked to Chachava and Prass. Ryazanov could not immediately be reached for comment.
DEAL SPECIFICATIONS
Yandex NV said the cash consideration of the deal – up to 230 billion rubles ($2.52 billion) – will be paid outside Russia.
A person familiar with the matter said it was the only currency that suited all parties.
Most Russian banks were disconnected from the SWIFT global payments system soon after Russia’s invasion of Ukraine, and transactions in dollars and euros have become increasingly difficult or impossible to execute.
The share of the Chinese yuan in the Russian market has increased dramatically.
($1 = 91.3875 rubles)