Yandex to exit Russia in $5.21 billion deal

Yandex to exit Russia: Yandex NV, often referred to as Russia’s Google, is set to exit Russia in a $5.21 billion deal with a group of Russian investors, marking the most substantial corporate departure from the country since the Ukraine conflict.

The deal, orchestrated by the Kremlin, entails the sale of Russia’s largest technology player to local ownership, including a fund owned by Lukoil, thus solidifying Yandex’s withdrawal from Western tech spheres.

Once considered a potential global business from Russia, Yandex, listed on Nasdaq, had established itself with leading online services, including search, advertising, and ride-hailing within Russia. The co-founder, Arkady Volozh, who moved to Israel in 2014, criticised Russia’s invasion of Ukraine in August, leading to discussions within the Kremlin about nationalising Yandex. However, concerns about a potential technology brain drain resulted in a complex deal, with over 95 per cent of Yandex’s revenues remaining in Russia under Russian control.

The Kremlin, endorsing the deal, has been in negotiations with Yandex for about 18 months to separate the Russian businesses from Yandex NV, its Dutch parent. Yandex, which has aimed to distance itself from Kremlin influence, faces challenges as it becomes a strategic national asset.

The deal values Yandex at $10.2 billion, a significant drop from its late 2021 market value of nearly $30 billion before Russia’s invasion. The sale price reflects a mandatory discount of at least 50 per cent to ‘fair value,’ as required by Russia’s government for deals involving foreign asset sales.

The buyer, Consortium.First, is a newly-formed investment fund led by members of Yandex’s Russian management team and supported by financial investors, including Lukoil-owned Argonaut. The sale, subject to regulatory and shareholder approval, is expected to close in two stages, with Yandex NV retaining a portfolio of early-stage tech businesses and certain assets after completion.

John Boynton, Chairman of Yandex NV’s board of directors, expressed that the team had found the best solution for shareholders and users in these “extraordinary circumstances.” Yandex NV will delist its Class A shares from the Moscow Exchange following the deal, expected after obtaining a new public listing. In a letter to Russian employees, Yandex managers emphasized the preservation of Yandex’s essence and independence amid this transformation.