Yandex, the company often referred to as “Russia’s Google”, has agreed to sell its operations in the country in a cash-and-shares deal worth Rbs475bn ($5.2bn), as it seeks to secure its future in the aftermath of the war in Ukraine.
The sale by Yandex’s Nasdaq-listed, Netherlands-based parent company, announced on Monday, to a consortium of Russian investors will also result in the group spinning off some of its main international projects.
The move follows a protracted 18-month negotiation with the Kremlin over how to redomicile a strategically important Russian asset while extracting some value for its predominantly western-based shareholders.
Those talks began after the Vladimir Putin ordered the invasion of Ukraine. The war has disrupted Yandex, which had ambitions of becoming a global internet giant and had a market capitalisation of $30bn at its peak. Thousands of its staff fled the country, while foreign investors and key partners distanced themselves from the Russian company.
The sale price “reflects a mandatory discount of at least 50 per cent” to “fair value” under Russian government rules on exits for western companies, Yandex’s parent company said.
Yandex said it would remain a “private and independent company” whose management team would “retain management of the company and the right to take key decisions” such as significant restructuring, the budget, and mergers and acquisitions.
According to Russian newswire Interfax, Dmitry Peskov, Putin’s spokesman, said: “Yandex is one of the economy’s national champions in high tech and one of the largest companies. It’s important for us that the company continues to work in the country.”
Yandex’s co-founder Arkady Volozh, who is under EU sanctions, moved to Israel in 2014 and later became one of the few leading Russian businessmen to speak out against the war. Last August, he said that the invasion “is barbaric, and I am categorically against it”.
Volozh’s statement, which came more than a year after the EU sanctions against him, later prompted criticism from Putin, who asked whether he had “a feeling of national self-identity or wants to emigrate and not identify as a Russian person anymore”.
Yandex had enlisted former finance minister Alexei Kudrin, one of Putin’s longtime confidants, to help thrash out the deal with Sergei Kirienko, the Kremlin’s domestic policy chief.
Under the deal, Yandex’s Russian business, which accounts for 95 per cent of the group’s revenue, assets, and employees, will be owned by a consortium including members of the company’s management and Argonaut, a fund ultimately owned by oil major Lukoil.
Its other members include firms controlled by Russian investors Alexander Chachava, Pavel Prass, and Alexander Ryazanov.
The consortium has pledged not to sell its shares in Yandex’s Russian business during an initial 12-month period following conclusion of the sale.
The Dutch company will rebrand and retain control of several internationally-focused businesses staffed by 1,300 former Yandex employees in self-driving, cloud, data, and education, as well as a data centre in Finland and some intellectual property licenses.
John Boynton, chair of Yandex’s parent company, said the group had faced “exceptional challenges” and believed the deal was “the best possible solution for our shareholders, our teams and our users in these extraordinary circumstances”.
None of the members of the acquiring consortium is “a target of, or owned or controlled by a target of, sanctions” in the US, EU, UK, and Switzerland, Yandex’s parent company said.
Volozh resigned as chief executive in 2022 and transferred voting rights from his controlling stake in Yandex’s parent company to the board following the sanctions.
Kudrin, who remains a corporate development adviser at Yandex, was placed under sanctions by the US last year, while Volozh’s former deputy Tigran Khudaverdyan resigned after the EU placed him under sanctions in 2022.
Yandex plans to conduct the deal in two parts following shareholder and regulatory approval.
The first part of the deal, set to close in the first half of 2024, envisions Yandex’s parent selling 68 per cent of the Russian business for the cash equivalent of Rbs230bn and up to 67.8mn shares in the Dutch company.
“The cash consideration will be paid in Chinese Yuan outside of Russia,” Yandex said.
The second part, planned to conclude seven weeks later, will see the consortium pay for the remaining stake in Yandex’s Russian company.
Yandex’s parent said it expected to return a “substantial proportion” of the sale proceeds to shareholders, probably though a share buyback.
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