In a new development reported by Reuters, the internet service company Yandex NV is leaving Russia with a whopping 475 billion Ruble deal, in United States dollars that equates to $5.21 billion.
This would make this the biggest corporate exit since the Russia-Ukraine conflict began two years ago. Co-founder of the company, Arkady Volozh, who moved to Israel back in 2014, has described Russia's actions as "Barbaric" which may have influenced those in the Kremlin to nationalize the company. Yandex has developed multiple services including search, advertising, and ride-hailing in Russia.
The deal will see the tech player fall under new ownership including a fund from the oil company Lukoil and solidify the company's break away from tech circles in the West. In addition, the biggest concern was stagnation and general technology brain drain thus resulting in a deal where Yandex's business accounting for 95% of its revenues will remain in Russia and fall under Russian control. The Kremlin welcomed this deal and had negotiated with Yandex for 18 months. Yandex has often sought to present itself as a company free from Kremlin influence but that goal has slowly become more difficult to achieve as the company continued to grow into a national and strategic asset.
The overall deal has calculated Yandex's capitalization at $10.2 billion, this number is based on a three-month weighted average for its shares on the Moscow exchange. Even before the Russia-Ukraine conflict began in 2021 Yandex's overall market value was quickly approaching $30 billion.
The sales price is to reflect "a mandatory discount of at least 50% to 'fair value" This was stated by Yandex NV themselves. In addition, the Russian Government must approve deals that involve foreign assets and in addition, demand a discount of 50%. However, almost 88% of Yandex's ownership structure is uncommitted with many Western backers among its shareholders.
The Buyer
The buyer is Consortium First, a newly developed investment fund that is currently managed by the trustee Solid Management. It was spearheaded by members of Yandex's senior management team based in Russia and supported by four financial investors including Infinity Management, IT Elaboration, Meridian-Servis, and Argonaut. It should be noted that Argonaut is an investment fund that is owned by Lukoil. In addition, Meridian-Servis is owned by Alexander Chachava, Pavel Pass, and Alexander Ryazanov.
The company has made it clear that none of its group members are under United States, EU, Swiss, or British Sanctions. The deal once given regulatory and shareholder approval will be finalized in two stages with the first stage being completed in the first half of 2024 with the second stage being within the following seven weeks.
The company also plans to delist its Class A shares from the Moscow Exchange following the company acquiring a public listing. It will also maintain a portfolio that consists of four early stages in the cloud those stages being data solutions, self-driving, and education technology sectors.
Finally, it will maintain a data center in Finland and the "core intellectual property asset" of 1,300 employees and licenses through 2024. Yandex has also told its employees that its main task is to maintain its essence and emphasized Yandex will remain independent.
