Yandex divests Russia-based businesses and plans rebranding
Facing geopolitical challenges, Yandex is selling its Russia-based businesses and international assets, focusing on its remaining international operations under a new brand.
Yandex N.V. this week announced the successful closing of its agreement to sell its Russia-based businesses to a buyer consortium. This move follows an agreement reached in February 2024.
Why it Matters: Yandex, a leading internet company in Russia, is undergoing a significant shift by exiting its home market. This decision likely stems from the complex geopolitical situation and potential economic sanctions. The company is now focusing on its remaining international businesses.
Scope of Sale: The sale encompasses approximately 68% of Yandex's Russia-based businesses and certain international market operations. The remaining Russian businesses will continue under new ownership.
Transaction Value: The total value of the deal is RUB 475 billion (approximately $5.2 billion, subject to adjustments). Payment will be made in a combination of cash and Class A shares of YNV (Yandex group).
Second Closing Expected: The full transaction is expected to close within seven weeks of the initial closing (likely in the first half of July 2024). At that point, Yandex will sell its remaining interest in the Russian businesses. Payment for the second closing will include up to 108 million Class A shares of YNV and potentially additional cash in Chinese Yuan paid outside of Russia.
Future of Yandex
Focus on International Businesses: Following the sale, Yandex will concentrate on its remaining international businesses, including Nebius AI, Toloka AI, Avride, and TripleTen. These companies operate in the fields of artificial intelligence, crowdsourcing, and data management.
New Leadership and Branding: The company expects to announce a new leadership team and strategy for the retained businesses in the coming months. Additionally, Yandex plans to introduce a new brand for these international operations and potentially change its legal name. The Yandex brand will continue to be used by the businesses sold to the buyer consortium.
Stock Listing and Shareholder Returns: Trading of Yandex's Class A shares remains halted on the Nasdaq stock exchange. While an exact date cannot be guaranteed, the company hopes to resume trading upon successful completion of the divestment. Yandex has delisted its Class A shares from the Moscow Exchange, effective July 10,2024. Following the sale, Yandex intends to use a portion of the proceeds to develop its remaining international businesses and potentially return a significant share of the remaining net proceeds to shareholders, likely through a stock repurchase program. The timing and amount of any such return will be decided after the full transaction closes and following an initial claims period.
The sale of Yandex's Russia-based businesses, including its namesake search engine, to a Russian consortium raises concerns about future search neutrality. While Yandex will retain its international search operations, the dominant search engine in Russia will now be under Russian ownership.
Prior to the war in Ukraine, Yandex held the dominant position in Russia's search market, capturing over 70% of user traffic according to Statcounter. Google, while a competitor, remained a distant second with a market share hovering around 20-25%. This dominance gave Yandex significant influence over how Russians accessed online information. With the search engine now under Russian ownership, concerns regarding potential censorship and manipulation of search results to align with the government's agenda are heightened.
