In a significant corporate move, 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. This deal marks the most substantial corporate departure from the country since the Ukraine conflict and represents a major shift in the Russian tech sphere.
Yandex, which was once considered a potential global business from Russia and is listed on Nasdaq, has established itself with leading online services, including search, advertising, and ride-hailing within Russia. However, the co-founder, Arkady Volozh, who moved to Israel in 2014, criticized Russia’s invasion of Ukraine in August, leading to discussions within the Kremlin about nationalizing Yandex.
The deal, orchestrated by the Kremlin, involves the sale of Russia’s largest technology player to local ownership, including a fund owned by Lukoil. This move solidifies Yandex’s withdrawal from Western tech spheres and reflects the challenges that the company faces as it becomes a strategic national asset.
The sale values Yandex at $10.2 billion, a significant drop from its late 2021 market value of nearly $30 billion before Russia’s invasion. This 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.
This move comes after 18 months of negotiations between the Kremlin and Yandex to separate the Russian businesses from Yandex NV, its Dutch parent. It represents a significant shift in the Russian tech landscape and raises questions about the future of technology and innovation in the country. The deal also reflects the impact of geopolitical events on the corporate world and the challenges that companies face in navigating complex international relations.
The exit of Yandex from Russia represents a major development in the global tech sphere and highlights the growing influence of geopolitical events on corporate decisions. It also raises important questions about the future of technology and innovation in Russia and the impact of national and international politics on the business landscape. As Yandex prepares to transition to local ownership, the tech industry will be closely watching the implications of this significant corporate departure from the country.