The Yandex US$5.2 billion exit from Russia – here's what you need to know

Yandex is a big deal in Russia, kind of like how Google dominates the internet game in many other places.

The Yandex US$5.2 billion exit from Russia – here's what you need to know
The logo of Russian technology giant Yandex is on display at the company's headquarters in Moscow, Russia December 9, 2022. REUTERS/Evgenia Novozhenina/File Photo

The backstory: Yandex is a big deal in Russia, kind of like how Google dominates the internet game in many other places. Since 2007, it's been registered in the Netherlands but still runs the show back home in Russia, offering everything from search to maps and email. It's been eyeing global expansion, with plans for its own browser and taxi service, much like Google Chrome and Uber. Yandex even went public on the Nasdaq in 2011, meaning its shares are up for grabs for investors worldwide. In 2021, it briefly reached a US$30 billion market cap, showing just how big a player it is in the Russian tech scene. But the Kremlin has always had its eye on Yandex. Back in 2022, it sold its news aggregator to a state-controlled rival, VK, to streamline operations and back away from politics.

More recently: After Russia invaded Ukraine, lots of foreign companies, like McDonald's and Exxon Mobil, started pulling out of the country because of geopolitical pressure and sanctions. Yandex felt the heat, too. Its shares on the Nasdaq were suspended, and the EU even slapped sanctions on Yandex's founder, Arkady Volozh.

The development: Yandex just inked a deal worth 475 billion rubles (US$5.21 billion) to hand over most of its ownership to a group of Russian investors. This is one of the biggest company shake-ups in Russia since the Ukraine war started. Now, Yandex will be wholly owned by Russian entities. In this deal, Yandex's management unit keeps a chunk of the company, while Lukoil PJSC's fund will snag 10%. It's also at a 50% discount, which Russia requires for sales of companies registered in countries it considers "unfriendly."

This deal, which took 18 months to finalize, will be closed in two stages – about half will be cash (around 230 billion rubles, or US$2.5 billion) to be paid in Chinese yuan outside Russia, and the rest will be 176 million shares of Yandex's parent company in the Netherlands.

Key comments: 

"The cash consideration will be paid in Chinese Yuan (CNH) outside of Russia," said Yandex, adding that it would stop using the Yandex brand after the deal is completed.

"This is exactly what we wanted to achieve a few years ago when Yandex was under threat of being taken over by Western IT giants," said Anton Gorelkin, deputy head of the Russian Parliament's committee on information policy. "Yandex is more than a company, it is an asset of the entire Russian society."