Yandex strikes $5 billion deal to exit Russia

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The parent company of Russia’s largest technology company, Yandex, said it had agreed to sell all its assets in the country for around $5 billion, in what would be one of Russia’s biggest corporate exits since the invasion of Ukraine.

The invasion had shaken Yandex — often called “the Russian Google” — and made his attempts to navigate the Kremlin’s authoritarian policies and a Western blockade of the Russian economy the most dramatic example of the war’s impact on the country’s once vaunted technology sector.

The agreement announced Monday came after 18 months of negotiations. This is an attempt by some company leaders to protect Yandex’s new generation of businesses from the consequences of the war and to obtain relief from European sanctions.

Under its terms, Yandex’s Netherlands-registered parent company, known as YNV, would sell all of its Russia-based operations, which accounted for 95% of its revenue between January and September last year, to a group of Yandex executives and investors linked to Russia. . The companies for sale represent the majority of the company’s assets and employ the majority of its 26,000 employees.

Assets include a popular internet browser and leading Russian food and taxi delivery apps. After the sale, YNV would retain control of four small subsidiaries focused on artificial intelligence, which already operate outside Russia. The new entity would employ around 1,300 people, including around 1,000 technology specialists, most of them Russian.

YNV’s chairman said in a statement Monday that the sale would allow the AI ​​business — which develops technologies such as self-driving cars, cloud computing and machine learning — to grow under new owners unrelated to Russia.

Buyers would pay in shares and cash – Chinese yuan transferred out of Russia – for a deal worth about $5.2 billion at current prices. This value represents about half of Yandex’s current market capitalization, a reflection of the deep cuts imposed by the Kremlin to punish companies that have tried to leave the country and are based in countries that the Kremlin considers hostile.

Companies based in the West faced extreme obstacles in their attempts to leave Russia over the past two years. Russian authorities must approve buyers, prices and terms, often forcing exiting companies to sell at fire-sale prices.

The deal is subject to Russian government approval and must be acceptable to European regulators. Yandex said it expected the first stage of the sale to take place by the middle of the year.

Aleksei L. Kudrin, the Russian government’s chief auditor and longtime confidant of President Vladimir V. Putin, became an official advisor to Yandex’s Russian Business in December 2022, a move widely seen as an attempt to gain government support for the restructuring plan.

“For us it is important that the company continues to operate in our country,” Kremlin spokesman Dmitry S. Peskov told reporters on Monday, referring to Yandex. If the deal is approved, “the Russian management of the company will remain the largest owner, which is also important,” he said, adding that he could not comment on the details of the corporate negotiations .

Various Western companies, including Danish brewer Carlsberg and German power company Uniper, had announced the sale of their Russian assets to local buyers, but ultimately achieved the desired results. sabotaged by the Kremlin.

Among the buyers of Russia’s best-known technology company are no prominent members of the country’s economic elite, reflecting YNV’s difficult task of finding investors with sufficient means but no direct ties with the Russian government or with sanctioned officials and oligarchs.

The buying group is led by some members of Yandex’s Russian management team and includes tech entrepreneur Alexander Chachava and an investment fund owned by Russia’s largest private oil company, Lukoil. YNV said none of the buyers are subject to Western sanctions and they are not allowed to sell or transfer their stakes for a year after the deal closes. These conditions are intended to address Western fears that the deal could ultimately benefit Kremlin insiders.

After the invasion of Ukraine, at least three top Yandex executives publicly condemned the war, becoming one of the most prominent Russian businessmen to break with the government line. Thousands of the company’s employees left the country after the invasion, often to continue working remotely.

Anti-war statements, however, did not protect the company from Western backlash. The European Union sanctioned Yandex founder Arkady Volosh and its then deputy chief executive, Tigran Khudaverdyan, for supporting Russia’s war effort, forcing them to withdraw from the company to maintain its access to Western financial services.

The European Union said Yandex’s news aggregation service then blocked anti-war content, enabling Russian propaganda. The company said it had no choice but to comply with Russia’s strict censorship laws and has since sold the news aggregation service.

Mr Volozh called the sanctions against him “misguided”.

“Russia’s invasion of Ukraine is barbaric and I am categorically opposed to it,” Mr. Volozh, who lives in Israel, said in a statement in August. “I must assume my share of responsibility for the country’s actions,” he said, without giving further details.

After being sanctioned, Mr. Volosh severed his formal ties with YNV, but still owns about 8 percent of the company’s shares.

Paul Sonne contributed to the reporting of this article.

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