Yandex, the “Russian Google”, collapses due to the war in Ukraine

The sale brings an end to two years of oppressive uncertainty. Like many other Russian companies, Yandex has been under the microscope after President Vladimir Putin sent his soldiers into Kiev in early 2022. Although the Yandex news service in particular has been exposed to Russian war propaganda, the tech company has remained free of financial sanctions imposed by the West. However, listing on the US Nasdaq stock exchange has been suspended, meaning investors cannot do anything with their shares.

The new owners will take over Yandex's Russian activities for 4.8 billion euros. This represents the largest exodus of an international company from Russia due to international sanctions. Many Western companies were forced to sell their activities in the country at a loss. Or they had to watch in horror as the Kremlin nationalized their assets.

After its founding in 1997, Yandex has grown from the largest search engine after Google and Bing to an online platform where Russians can search for typical Internet services such as a marketplace, navigation aids, and a music streaming service, but also for useful offline services. Such as car sharing and meal delivery.

Amsterdam

It is these services that will continue under the name Yandex, with the new owners: the current management, the investment fund of the oil company Lukoil and three private investors. None of these partners has a controlling stake or is burdened by the sanctions imposed by the West on Russia. The latter was one of the conditions that Yandex itself attached to the split when the company announced the plans last November.

The international branch includes the division of artificial intelligence research, self-driving cars, online education and cloud services. These four small parts will continue in Amsterdam under a new name that has not yet been invented. About 450 of the 1,500 employees work there.

Small “Amsterdam” leg. Of the total turnover generated by Yandex in the first nine months of 2023 – 5.6 billion euros – only 50 million came from its international activities. The company also incurred losses in this.

Co-founder blacklisted

Arkady Volozhej, co-founder, then CEO and major shareholder, did not escape the sanctions. The European Union blacklisted him for allegedly supporting the war in Ukraine. Voloz was forced to resign from all his management positions at Yandex.

Voloz did everything he could to get off the EU blacklist, but he did not dare to speak out against the war. He only took this step last August. The billionaire, who has lived in Israel for ten years, described the raid as “barbaric” and said he was “shocked by the fate of the Ukrainian people.”

This shift made little impression in Brussels: during the interim evaluation, the sanctions imposed on Voloz were maintained.

Little money for shareholders

Despite the record high, the acquisition price will upset shareholders. The selling price was calculated based on the average market value of the securities over the past three months. This amounted to 9.6 billion euros. But because the Kremlin ordered that the foreign company sell its activities at a 50% discount, investors have less money left.

For shareholders, Yandex is no longer the goose that lays the golden egg: just months before the outbreak of war in Ukraine, Russia's Google was still worth about 28 billion euros. Then the price collapsed.