Yandex NVthe Dutch parent company of the Russian internet giant of the same name, is sale the last of its remaining Russian businesses at a deep discount, following geopolitical pressures arising from Russia’s invasion of Ukraine two years ago.
The transaction, which will include the sale of all of Yandex NV’s businesses in Russia and a handful of neighboring markets, will be valued at about 475 billion rubles ($5.2 billion) — about half of its market capitalization according to the average share price in the quarter ending January 31, 2024. The reason for this reduction is due to a rule imposed by the Russian government, which states that any sale of Russian assets by parent companies incorporated in countries considered “unfriendly ” from Russia, will be subject to a “compulsory discount” of at least 50 percent. And the Netherlands, as a member of an EU bloc that has sanctioned Russia, falls into that “unfriendly” category.
“Google of Russia”
For context, Yandex was founded in 1997 and eventually became known as “Russia’s Google” since it sold products similar to its US counterpart, such as search, e-commerce, advertising, maps, transportation and more. However, while Yandex’s main market was Russia, the company listed on Nasdaq in 2011 through a holding company called Yandex NV, which is registered in the Netherlands, followed by a secondary listing three years later on the Moscow Stock Exchange.
Yandex has performed well as a public company, reaching a market cap of $31 billion in November 2021. However, in the following months, Yandex shares fell as Russia invaded neighboring Ukraine, with the Nasdaq putting temporary suspension of transactions before Yandex was delisted (along with many other Russian-linked companies) last March.
Fast forward to today, and it’s no surprise that Yandex NV—the parent holding company—is now offloading all remaining Russia-linked assets. Indeed, many Western companies have suspended operations in Russia due to sanctions, and Yandex CEO and founder Arkady Volozh he was forced to leave the company after being placed on a sanctions list issued by the European Union.
Subsequently, Yandex has already divested some of its properties, including selling its news service to a closely-linked rival in the Russian stateand the company announced plans for a corporate restructuring to further distance itself from its Russian roots. Yandex also previously said it would rebrand its Dutch holding company, although that hasn’t happened yet — but once that deal goes through, Yandex NV has confirmed it will no longer use the Yandex brand, as it will be retained by the new Russian owners.
“We expect our international businesses to 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.”
Joint venture
Breaking down the terms of the transaction, Yandex NV will be paid “at least” 230 billion rubles ($2.5 billion) in cash, which will be paid in Chinese yuan (CNH) — presumably because the buyers, all of whom have their in Russia, they cannot transact in dollars or euros.
As for who the buyers are, Yandex says it will be a consortium led by executives from Yandex’s Russian businesses, who will provide part of the acquisition capital through a special purpose limited liability company called “FMP.” Other investors include an entity called Argonaut, which Yandex says is a closed-end mutual fund owned by a Russian oil company PJSC Lukoil; “Infinity Management”, a limited liability company owned by a businessman and entrepreneur Alexander Chahava; “IT.Elaboration”, a limited liability company owned by Pavel PrasCEO of the investment manager Infinitum Asset Services; and “Meridian-Servis”, a special purpose limited liability company owned by a businessman and former politician Alexander Ryazanov.
Specifically, the businesses that Yandex NV is selling represent “more than 95%” of Yandex Group’s revenue for the first nine months of 2023 and roughly the same portion of its total assets and headcount. Simply put, Yandex NV will be a much sleeker outfit once this transaction closes – its remaining “non-Russian assets,” as it puts it, will include four early-stage technology businesses. These include an autonomous vehicle company called Avride; a cloud AI platform called Nebius AI; an artificial intelligence and LLM production company called Toloka AI; and edtech platform TripleTen.
Elsewhere, Yandex NV will also retain ownership of a data center in Finland, as well as certain other investments in various technology companies.
The deal, which is still subject to regulatory and shareholder approval, is expected to close in two stages – in the first part Yandex NV will sell 68% of the Russian business within the first half of 2024 in a combination of cash and stock in Dutch entity. The second part is expected to close within seven weeks of the closure of the first stage.
The company says it plans to use a portion of the cash proceeds from the sale to further develop its remaining businesses and provide a return to its shareholders.
“Since February 2022, Yandex Group and our team have faced extraordinary challenges. We believe we have found the best possible solution for our shareholders, our teams and our users in these exceptional circumstances,” said Yandex NV President John Boynton. Press release. “The proposed transaction will allow shareholders to recover some value for the businesses we are divesting, while unlocking new growth opportunities for the international businesses we will retain and allowing the divested businesses to operate under new ownership.”
