Yandex, once dubbed Russia’s Google for becoming the country’s dominant online search engine, will exit Russia entirely, selling its assets there in a deeply discounted $5.2 billion deal that marks the end of an era.
Under the agreement announced on February 5 by Yandex’s Netherlands-based corporate parent, a “purchaser consortium” that includes the company’s management, an investment fund linked to Russian oil giant LUKoil, and three other businessmen will take over Yandex’s operations inside Russia.
The Russian entity, meanwhile, takes over the vast bulk of the company’s revenue-generating businesses, including the country’s dominant search engine, and also major operations in things like online shopping, advertising, food delivery, taxis, maps, and other things.
The Dutch parent is expected to retain control of several non-Russian businesses, including operations in cloud computing, self-driving cars, and a number of patents and other intellectual property licenses.
The price takes into account a 50 percent discount mandated by law on the sale of assets of companies from “unfriendly countries” when they exit the local market.
“Since February 2022, the Yandex group and our team have faced exceptional challenges. We believe that we have found the best possible solution for our shareholders, our teams, and our users in these extraordinary circumstances,” Yandex’s board Chairman John Boynton said in a statement.
February 2022 is when Russia launched its full-scale invasion of Ukraine, which sparked the exit of dozens of international companies from their Russian operations.
Kremlin spokesman Dmitry Peskov welcomed news of the sale.
“Yandex is one of the economy’s national champions in high tech and one of the largest companies,” he told reporters. “It’s important for us that the company continues to work in the country.”
Yandex was a long-admired company, in and out of Russia, not only for its search-engine dominance but its innovations and fast-moving efforts to move into lucrative online businesses such as ride hailing and food delivery. Its shares, which traded on the U.S. Nasdaq exchange, were held by major Western institutional investors.
The announcement caps a tumultuous 18-month period since the Kremlin’s decision to launch its large-scale invasion of Ukraine. In the wake of the invasion, Russian lawmakers passed measures that amount to censorship of news and independent information about the war, which the Kremlin euphemistically calls a “special military operation.”
In the weeks that followed, Yandex, whose search engine and news portals were a major source of information for Russians, came under pressure to skew search results, and direct readers to only specified news outlets.
Two board members resigned; several top executives departed, along with thousands of employees; and the company’s American Depositary Receipts, traded on the U.S. Nasdaq exchange, were frozen. The company decided to sell its news and entertainment channels.
Months later, Yandex announced a plan for a wholesale reorganization, with a possible exit from Russia. Aleksei Kudrin, a former finance minister and longtime Kremlin confidant viewed as a “liberal” policymaker, was brought on to help negotiate the restructuring.
But the talks faltered as reports emerged that powerful Kremlin-linked oligarchs were in the running to take it over, and Yandex’s board feared Western sanctions imposed after the Russian invasion might pose legal problems. Kudrin himself ended up being sanctioned by the United States, while the company’s co-founder, Arkady Volozh, who resigned months after the invasion, was hit with European Union sanctions.
The negotiations were complicated further last August when Volozh publicly criticized the Ukraine war, calling it “barbaric.”
Aside from LUKoil and the stake to be held by management, the other three Russian members of the “purchaser consortium” are relatively unknown. One previously was an executive at Gazprom, the state-controlled natural gas giant.
None of the buyers are “a target of, or owned or controlled by a target of, sanctions in the U.S., EU, U.K., or Switzerland,” the company said.