The Russian internet giant's eponymous Dutch parent company, Yandex NV, is selling its remaining Russian operations at a steep discount due to geopolitical pressures stemming from Russia's invasion of Ukraine two years ago.
The transaction value, which includes the sale of all Yandex NV operations in Russia and some neighboring markets, is expected to reach approximately 475 billion rubles ($5.2 billion), which is equivalent to the company's market capitalization based on average Russian stock prices. This corresponds to approximately half. The reason for this price drop is due to rules imposed by the Russian government, which stipulate that any sale of Russian assets by a parent company established in a country deemed “unfriendly” by Russia is subject to restrictions. . “Compulsory discount” of at least 50 percent. And as a member of the EU bloc that has imposed sanctions on Russia, the Netherlands falls into that “unfriendly” category.
“Russian Google”
For context, Yandex was founded in 1997 and sold products much like Google in the United States, including search, e-commerce, advertising, maps, transportation, etc., and eventually became known as It became known as “Google”. However, although Yandex's main market was Russia, the company listed on the Nasdaq in 2011 through a Dutch-registered holding company called Yandex NV, followed by a secondary listing on the Moscow Exchange three years later.
Yandex has performed well as a public company, reaching a peak market capitalization of $31 billion in November 2021. But Russia's invasion of neighboring Ukraine caused Yandex's stock price to plummet in the months that followed, before Nasdaq suspended trading. Yandex was delisted (along with several other Russia-related companies) in March last year.
Fast forward to today, and it's not really surprising that the parent holding company, Yandex NV, is selling off all remaining assets related to Russia. In fact, many Western companies have ceased operations in Russia due to sanctions, and Yandex CEO and founder Arkady Volosh was forced to leave after being placed on the European Union's sanctions list.
Since then, Yandex has already sold off some of its assets, including selling its news service to a rival with close ties to the Russian state, and the company plans a corporate restructuring to further distance itself from its Russian roots. announced. Yandex also previously said it would rebrand its Dutch holding company, but that hasn't happened yet. However, once the deal was completed, Yandex NV confirmed that it would no longer use the Yandex brand. New Russian owner.
“We look forward to seeing our international companies develop their own branding in the future,” Yandex wrote in a press release. “We intend to seek shareholder approval to change YNV's legal name in due course.”
consortium
A breakdown of the terms of the deal states that Yandex NV will receive “at least” 230 billion rubles ($2.5 billion) in cash, to be paid in Chinese yuan (CNH). Transactions cannot be made in dollars or euros.
As for who the buyer is, Yandex said it would be a consortium led by senior managers of its Russian operations, with part of the financing to be provided through a special purpose limited liability company called FMP. Other investors include an entity called Argonaut. According to Yandex, it is a closed-end mutual investment complex fund owned by Russian oil company PJSC Lukoil. “Infinity Management”, a special purpose corporation owned by venture capitalist and entrepreneur Alexander Chachava; “IT.Elaboration” is a special purpose stock company owned by Pavel Prass, CEO of investment management company Infinitum Asset Services. and Meridian Servis, a special purpose limited liability company owned by businessman and former politician Alexander Ryazanov.
In particular, the businesses to be sold by Yandex NV accounted for “more than 95%” of Yandex Group's revenue in the first nine months of 2023, and accounted for approximately the same proportion of total assets and number of employees. Simply put, once this deal closes, Yandex NV will be significantly smaller. The remaining “non-Russian assets,” as the company calls them, will include four early-stage technology businesses. These include a self-driving car company called Avride. An AI cloud platform called Nebius AI. A generative AI and LLM company called Toloka AI. and edtech platform TripleTen.
Elsewhere, Yandex NV will retain ownership of data centers in Finland, as well as other investments in various technology companies.
The deal still requires regulatory and shareholder approval, but is touted to be completed in two stages. The first part will see Yandex NV sell a 68% stake in its Russian operations within the first half of 2024 for a combination of cash and stock. In the Dutch entity. The second phase is expected to be completed within seven weeks from the end of the first phase.
The company said it plans to use a portion of the cash proceeds from the sale to further develop its remaining businesses and return profits to shareholders.
“Since February 2022, Yandex Group and our team have faced extraordinary challenges. We believe that in this extraordinary situation we have found the best possible solution for our shareholders, team and users.” said Yandex NV Chairman John Boynton in a press release. “The proposed transaction will allow our shareholders to recover a portion of the value of the businesses we are selling, while also unlocking new growth potential in our retained international businesses and bringing the divested businesses under new ownership. We will be able to operate under the right.”