Pressure increases on Yandex despite denials about state bank takeover

The Bell

What happened

The possible purchase of Russia’s largest — and only — independent Internet company, Yandex, by state-owned Sberbank remains the talk of the Russian business world. There is still no official confirmation of negotiations, but Yandex, having lost 30% of its value since news of the possible deal, is now having problems with the Russian parliament.

  • The news of Sberbank’s bid to buy 30% of Yandex was first reported by The Bell at the end of last week. Sberbank at once denied negotiations were happening, but the news wiped about $3 billion off the company’s capitalization in New York. Yandex kept silent for three days, and then on Monday gave a statement in which it did not deny negotiations — but said that the company’s founder, Arkady Volozh, who controls 49% of voting shares, will not sell his stake.
  • No one can get control over Yandex without consent from Volozh and other senior executives: together they own 57% of Yandex’s voting shares. Any bargain that puts control of the company into another party’s hands would require altering the shareholder agreement and must be approved by 66.6% of shareholders. In practice, this means that even if Volozh agrees to a deal, minority shareholders will also need to give their approval.
  • The Bell was told by sources that Sberbank justifies its proposal to purchase equity in Yandex because it will protect the company from problems with competitors and the government. Coincidence or not, but this week Russian Duma deputies tabled as many as two bills which could hit Yandex’s business. On Monday, they proposed that foreigners be banned from owning news aggregators in Russia (Yandex, registered in the Netherlands, controls Russia’s largest aggregator Yandex.News). And on Thursday, there was a suggestion that online taxi aggregators be prevented from setting the rates for taxi rides. This would destroy the business of Yandex.Taxi, which accounts for 75% of Russia’s taxi market and swallowed Uber’s Russian division last year.

Why the world should care

There are two Russian Internet companies, Yandex and Mail.Ru Group, which are making credible bids to be all-encompassing online platforms, in the same way as China’s Alibaba and Tencent. The sale of Yandex to state-owned Sberbank would reveal a huge amount about the fate of online business and technology in Russia.

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