20-F: Yandex N.V. Announces Agreement to Sell Russian Businesses in Major Restructuring

Yandex N.V. has reached a definitive agreement to sell its Russian businesses to a consortium, marking a significant shift for the company.

Summary

• Yandex N.V. has agreed to sell its Russian businesses and certain international assets to a consortium led by JSC Solid Management.
• The deal involves a two-stage closing process.
• The first closing will see Yandex N.V. sell up to 68% of the Russian business for RUB 230 billion in cash (paid in Chinese Yuan) and up to 68 million of Yandex N.V. Class A shares.
• Following the first closing, an amendment to Yandex N.V.'s articles of association will take effect, simplifying corporate governance.
• Four Russian board members will resign at the first closing.
• The second closing, expected within seven weeks of the first, will involve the sale of the remaining interest in the Russian business.
• Consideration for the second closing will be a combination of up to 108 million Yandex N.V. Class A shares and up to RUB 135 billion in cash (paid in Chinese Yuan).
• After the sale, Yandex N.V. will retain a portfolio of international businesses, including Nebius AI, Toloka AI, Avride, TripleTen, a data center in Finland, and minority investments.
• The Yandex brand will be transferred to the purchaser, while Yandex N.V. will adopt a new brand and potentially a new legal name.
• The company will apply to terminate the listing of its Class A shares on the Moscow Exchange.
• The total consideration for the sale is RUB 475 billion.
• The Longstop Date, the deadline for satisfying conditions, is April 30, 2024, but may be extended.
• The Immovable Property Share Statement is a calculation of the share of immovable property located in the Russian Federation, of which assets of the Company directly or indirectly consist as at a specified date.

Sentiment

Score: 6

Explanation: The sentiment is neutral. While the sale provides a path forward, it also involves significant loss of revenue and uncertainty.

Positives

• The sale allows Yandex N.V. to restructure and focus on international businesses.
• The deal simplifies Yandex N.V.'s corporate governance.
• Yandex N.V. retains key international assets with growth potential.
• The sale provides Yandex N.V. with significant cash and equity.

Negatives

• Yandex N.V. loses its Russian business, which generated the majority of its revenue.
• The company will need to establish a new brand and potentially a new legal name.
• Trading in Yandex N.V. Class A shares remains halted on Nasdaq.
• The company will apply to terminate the listing of its Class A shares on the Moscow Exchange.

Risks

• The sale may not be completed.
• The purchaser may be unable to pay the cash consideration.
• Russian legislation could negatively impact Yandex N.V. if the sale is not completed.
• The retained businesses are at an early stage of development.
• Yandex N.V. will no longer have access to the intellectual property of the Russian businesses.
• The company may incur material tax liabilities in connection with the sale.
• The price of Yandex N.V. Class A shares may be volatile.
• The company may be subject to material claims under the share purchase agreement.

Future Outlook

Yandex N.V. will focus on developing its retained international businesses and may consider returning capital to shareholders. The company expects to provide updates on its strategy and business plans in the coming months.

Industry Context

This announcement reflects a broader trend of restructuring and divestment among international companies operating in Russia due to geopolitical tensions and regulatory changes.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders will experience a significant change in the company's business and strategy.
• Employees in the Russian businesses will transition to new ownership.
• Employees in the retained businesses will focus on international markets.
• Customers of the Russian businesses will continue to receive services under the Yandex brand.
• Customers of the retained businesses will experience a shift in focus to international markets.

Next Steps

• Complete the first and second closings of the sale.
• Develop a new brand for the retained group.
• Propose a change in the legal name of the company.
• Provide updates to shareholders on the strategy and business plans for the retained businesses.
• Potentially return capital to shareholders.

Key Dates

Keywords

Yandex, Sale, Russian business, Divestment, JSC Solid Management, Consortium First, Nebius AI, Toloka AI, Avride, TripleTen, Share Purchase Agreement, Class A shares