Yandex NV, often dubbed as Russia’s equivalent to Google, has agreed to a 475 billion-rouble ($5.21 billion) sale to a consortium of Russian investors. This represents the largest corporate retreat from the country following Moscow’s invasion of Ukraine nearly two years ago.
The deal, backed by the Kremlin, would result in Russia’s foremost tech company transitioning entirely under Russian ownership, with a fund ultimately owned by oil giant Lukoil. As such, the deal would solidify Yandex’s departure from Western tech groups.
Yandex, a Nasdaq-listed firm once considered as one of the few Russian enterprises with global growth potential, offers a variety of leading online services in Russia, including search, advertising, and ride-hailing services. After co-founder Arkady Volozh, who relocated from Russia to Israel in 2014, criticized Russia’s invasion of Ukraine as “barbaric,” there were calls within the Kremlin to nationalize Yandex.
However, fears over a tech industry brain drain finally tethered such suggestions, leading to a multi-faceted agreement where over 95% of Yandex’s businesses, in terms of revenue, will stay in Russia under Russian control. Yandex, with a market capitalization calculated at $10.2 billion, has constantly endeavored to maintain its independence from Kremlin influence, a challenge considering its increasing national strategic importance.
The sales price denotes a compulsory discount of at least 50% to the ‘fair value’, reflecting Russia’s requirement of minimum 50% discounts on deals involving foreign asset sales. The business structure of Yandex is mainly free-float, with numerous Western funds among its current shareholders.
Consortium.First, the buyer, is a newly-formed investment fund managed by trustee Solid Management, transitioniung the ownership of Yandex to Russian hands. Members of Yandex’s leadership team in Russia spearheaded the fund, which is backed by four financial investors, including Argonaut, an investment fund ultimately owned by Lukoil.
The sale awaits regulatory and shareholder approval and is planned to occur in two phases. The first step is expected to close in the first half of 2024, followed by the second phase within seven weeks.
In “extraordinary circumstances,” Yandex NV claims to have located the best solution for its shareholders and users. Following completion of the deal, it will maintain a portfolio of four early-stage tech businesses and retain a Finnish data center, the “core intellectual property asset” of 1,300 employees, and transition licenses through 2024.
