Russian multinational technology company providing internet-related products and services, Yandex, is selling the last of its remaining Russian businesses at a steep discount, following geopolitical pressures that emerged from Russia’s invasion of Ukraine two years ago.
The value of the transaction, which will include the sale of all Yandex businesses in Russia and some neighboring markets, will amount to around 475 billion rubles ($5.2 billion) — roughly half of its market capitalization as per the average share price in the three months ending January 31, 2024.
This is due to a rule imposed by the Russian Government which stipulates that any sale of Russian assets by parent companies incorporated in countries deemed as “unfriendly” by Russia, will be subject to a “mandatory discount” of at least 50 percent.
Netherlands, as a member of an EU bloc that has imposed sanctions on Russia, has managed to fall into that “unfriendly” category.
While Yandex’s primary market was Russia, the company went public on the Nasdaq in 2011 via a holding company called Yandex N.V. registered in the Netherlands, followed by a secondary listing three years later on the Moscow Exchange.
Yandex had been performing well as a public company, hitting a peak market cap of $31 billion in November, 2021.
But then in the months that followed, Yandex’s shares nosedived as Russia invaded neighboring Ukraine, with the Nasdaq putting a temporary halt on trading before delisting Yandex, alongside several other Russian-affiliated companies, last March.
Many Western companies have suspended operations in Russia due to sanctions, while Yandex CEO and founder Arkady Volozh was forced out of the company after he was placed on a list of sanctions issued by the European Union.
Yandex has already been divesting some of its properties, including selling its news service to a rival with close ties to the Russian State, and the company announced plans for a corporate restructuring to further distance itself from its Russian roots.
Yandex had also said previously that it would re-brand its Dutch holding company to no longer use the Yandex brand, stating that will be kept by the new Russian owners.
Breaking down the terms of the transaction, Yandex N.V. will be paid at least 230 billion rubles ($2.5 billion) in cash, which will be paid in Chinese Yuan presumably because the buyers, who are all Russia-based, aren’t able to transact in dollars or euros.
The company says it will be a consortium led by senior managers from Yandex’s Russian businesses, who will provide some of the acquisition capital via a special purpose limited liability company called “FMP.”
Other investors include an entity called Argonaut, which Yandex says is a closed-end mutual investment combined fund owned by Russian oil company PJSC Lukoil.
Philips Babatunde