Devendra Kumar
In a significant move, Yandex, one of Russia’s most prominent tech companies, has agreed to sell its domestic operations to its own managers and Lukoil, an oil company, for a discounted price of over five billion dollars. This deal marks one of the most significant exits for Western-held companies in Russia since the invasion of Ukraine. The sale is a result of the severe difficulties faced by the company since the start of the war and the imposition of financial and economic sanctions.
Yandex was founded in 1997 and has long been a major player in the Russian tech scene, rivalling Google and Yahoo in the country. However, the company’s fortunes have taken a hit since President Vladimir Putin’s invasion of Ukraine in February 2022. The invasion led to the implementation of sanctions by the European Union, which had a severe impact on Yandex’s operations. As a result, the company’s co-founder, Arkady Volozh, resigned as CEO and moved to Israel after being hit with European Union sanctions.
The sale of Yandex’s domestic operations will transfer its core business, representing over 95% of its revenue, assets, and employees, to a group of up to 50 managers, Lukoil, and business entities owned by investors Alexander Chachava, Pavel Prass, and Alexander Ryazanov. Yandex NV will retain its international businesses, including self-driving technology, generative artificial intelligence, and a data center in Finland.
According to Yandex NV chairman John Boynton, the company has faced “exceptional challenges” since the start of the war and that the sale will allow shareholders to recover some value for the businesses being divested, while unlocking new growth potential for the international businesses retained. The sale is a significant departure from Yandex’s earlier plans to list its Russian business on the Moscow Stock Exchange, which were scrapped due to the war and subsequent sanctions.
The sale is notable as it comes after drawn-out negotiations, which demonstrate the difficulties international companies face when trying to unload their Russian businesses. The Russian government has seized assets or businesses belonging to Western corporations in Russia, making it challenging for companies to exit the country. Despite the challenges, Yandex has managed to secure a deal that will allow it to maintain its Russian operations, providing a lifeline to the Russian economy.
The Kremlin has welcomed the agreement, stating that it is essential for Yandex’s Russian management to remain the main owner and for the company to continue its operations in Russia. The sale will enable Yandex to maintain its presence in Russia, but its international businesses will be unaffected by the deal, allowing the company to continue growing and expanding globally.