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Dutch Yandex NV agrees to sale of Russian assets in $5.2B deal

Dutch Yandex NV, the parent company of the internet and technology company Yandex said on Monday it had agreed to a 475-billion-ruble ($5.21 billion) cash and shares deal to sell its Russian assets to a consortium of Russian investors, including a fund ultimately owned by oil major Lukoil.

Often referred to as “Russia’s Google,” tech firm Yandex developed leading online services, including search, advertising and ride-hailing, and was one of the few Russian companies with the potential to become a global business until Moscow invaded Ukraine in February 2022.

The deal would see the country’s largest technology player fall entirely under Russian ownership, cementing Yandex’s departure from the Western tech circles it once courted.

Yandex and the Kremlin have been engaged in negotiations for around 18 months to try and spin off Yandex’s Russian businesses from its parent company, Nasdaq-listed Yandex NV.

The sale price reflects “a mandatory discount of at least 50% to ‘fair value,'” Yandex NV said. Russia’s government must approve deals involving foreign asset sales and demands a discount of at least 50%.

For the deal, Yandex’s market capitalization was calculated as $10.2 billion, based on a three-month weighted average for Yandex shares on the Moscow Exchange. In late 2021, before Russia’s invasion, Yandex’s market capitalization had approached $30 billion.

Almost 88% of Yandex’s ownership structure is currently free-float, with many Western funds among its shareholders.

Yandex NV said the deal would consist of a cash equivalent of at least 230 billion rubles and up to around 176 million Yandex NV Class A shares.

“The cash consideration will be paid in Chinese Yuan (CNH) outside of Russia,” Yandex NV said in a statement.

‘Extraordinary circumstances’

The buyer, Consortium.First, is a newly formed investment fund managed by trustee Solid Management. The consortium was led by members of Yandex’s senior management team in Russia and supported by four financial investors including Argonaut, an investment fund ultimately owned by Lukoil.

Three other companies – Infinity Management, IT.Elaboration and Meridian-Servis – owned by Alexander Chachava, Pavel Prass and Alexander Ryazanov respectively, were also among the buyers, Yandex NV said.

Yandex NV made clear that no members of the consortium are under the U.S., EU, U.K. or Swiss sanctions. That requirement has ruled out many other potential Russian buyers, sources have previously told Reuters.

The sale, once given regulatory and shareholder approval, is set to be completed in two stages, the first of which is anticipated to close in the first half of 2024, with the second stage following within seven weeks.

Yandex NV plans to delist its Class A shares from the Moscow Exchange, expected after Yandex has obtained a new public listing.

John Boynton, the chairperson of Yandex NV’s board of directors, said the team had found the best possible solution for its shareholders and users in “extraordinary circumstances.”

Yandex NV will retain a portfolio of four early-stage tech businesses in the cloud, data solutions, self-driving and education technology sectors.

It will also keep a data center in Finland, as well as the “core intellectual property asset” of 1,300 employees, and transitional licenses through 2024.

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