AMSTERDAM - Yandex (NASDAQ:YNDX) NV, the Netherlands-based tech giant known for operating Russia's leading search engine, ride-hailing app, and e-commerce platform, is set to divest its entire Russian business. This move comes as a response to the criticism of the Ukraine war by the company's founder Arkady Volozh, which has led to hesitation among potential investors. A group of Russian tycoons, eyeing the company's assets, is insisting on total separation from the Dutch parent company.
The decision to sell follows intense scrutiny on Yandex since Russia's invasion of Ukraine over 20 months ago. In June 2022, the European Union imposed sanctions on Volozh due to Yandex’s alleged role in disseminating Russian propaganda. The sanctions have contributed to increasing pressure on the company, alongside the broader economic implications of the conflict.
The stakes are high for Yandex, with its Russian unit being its primary source of revenue and valued at approximately $6.6 billion. This valuation accounts for a mandatory discount mandated by Russian regulations. Despite ongoing speculations about the sale, Yandex has not made any official statements regarding these developments.
Volozh's family trust holds an 8.5% share in Yandex, which was traded on the Nasdaq until trading was suspended following Russia's military actions in Ukraine. As part of the strategic shift, Yandex is planning to register a subsidiary in a special tax zone within Russia's Kaliningrad region. This step is intended to consolidate its Russian assets ahead of the sale.
In late November, Yandex's board is scheduled to convene to finalize new terms for the sale, with an announcement of a potential deal expected as early as next month. The proceeds from this divestiture are slated to be returned to shareholders through buybacks or dividends.
Moreover, certain Russian investors in Yandex NV will be given an opportunity to exchange their holdings in the Dutch parent company for shares in the newly formed Kaliningrad unit. Notable figures showing interest include billionaires Vladimir Potanin and Vagit Alekperov.
The unfolding situation highlights the complex interplay between business interests and geopolitical tensions. For Yandex and its investors, the upcoming board meeting will be crucial in determining the future direction of the company amidst a challenging landscape for Russian businesses with international ties.
InvestingPro Insights
Yandex NV, the Netherlands-based tech giant, has been showing promising signs in its financial health, as evidenced by the real-time data from InvestingPro. The company's market cap stands at a robust 6850M USD, with a P/E ratio of 20.41, indicating a healthy valuation. The last twelve months as of Q3 2023 saw an impressive growth in revenue of 53.09%, a testament to the company's ability to increase its earnings in a challenging environment.
InvestingPro Tips offer some valuable insights into Yandex's current position. The company has been witnessing an acceleration in revenue growth and consistently increasing earnings per share, which are positive signs for potential investors. Furthermore, the stock is trading at a low P/E ratio relative to near-term earnings growth, indicating that it could be undervalued. Despite the positive indicators, investors should be aware that Yandex's net income is expected to drop this year and its short-term obligations exceed its liquid assets.
InvestingPro offers 9 more tips about Yandex NV for those interested in a deeper analysis. These tips, combined with the real-time data, provide a comprehensive view of the company's financial standing, helping investors make informed decisions.
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