Russia’s Yandex Agrees $5.5Bln Deal For Tinkoff Bank
Yandex — Russia’s largest technology company — is set to buy challenger bank Tinkoff in a $5.5 billion deal that would become one of the most high-profile Russian tie-ups in recent corporate history.
In an announcement to the London Stock Exchange posted Tuesday
evening after the end of trading, Tinkoff said the two sides “have come to an
agreement in principle” on the proposed takeover.
Yandex would purchase Tinkoff shares at $27.64 each — a 6%
premium on Tinkoff’s closing price Tuesday. The deal would cover "100% of
Tinkoff’s share capital," Yandex said in a separate statement Tuesday
evening.
Yandex shares — listed on the U.S. Nasdaq exchange — jumped
3.5% higher on the news.
Both companies have seen their share prices climb rapidly
since the start of the coronavirus pandemic, setting all-time highs in recent
weeks.
The technology giant, often dubbed “Russia’s Google,”
recently ended a joint venture with the country’s largest bank, state-owned
Sberbank, in financial services — a breakup which freed Yandex to look at
alternative business lines in the sphere. Since then its top managers have
repeatedly talked up the prospects and potential of entering the financial
sector.
Tinkoff is Russia’s largest online challenger bank, founded
by — and named after — oligarch Oleg Tinkov. It has been growing aggressively
in recent years, with profits almost doubling to 36 billion rubles in 2019
(around $570 million at the time).
Yandex posted profits of $180 million in 2019 on $2.8
billion of revenues — the majority of which came from its lucrative search arm,
where the company dominates the Russian market. More than one of every two
rubles of online advertising in Russia is spent with Yandex. It also boasts
Russia’s top ride-hailing service, Yandex Taxi, as well as fast-growing
ventures in food delivery, carsharing and self-driving cars.
Billionaire Tinkov first publicly suggested a deal between
the two firms at the St. Petersburg International Economic Forum (SPIEF) in
2019, telling Yandex founder Arkady Volozh a combined Yandex-Tinkoff tech and
financial services giant could be worth $20 billion. Yandex’s market
capitalization has since passed that level on its own.
Tinkov has stepped back from the business in recent years.
In March, the U.S. Securities and Exchange Commission (SEC) charged him with
tax fraud for allegedly concealing $1 billion in assets and just weeks later he
confirmed he was being treated in London for acute leukaemia.
Yandex has also caught the unfavorable attention of
regulators. Last year a Russian lawmaker introduced draft legislation which
would have limited foreign ownership of Russian technology companies — a
proposal which was interpreted as specifically aimed at U.S.-listed Yandex and
which sent shares crashing.
The firm eventually struck a compromise under which a new
“public interest foundation” was established with a Kremlin-approved board of
directors holding a veto over significant ownership changes and control of the
firm’s intellectual property and its customer data.
Tinkoff said the proposed takeover would be subject to
Cyrpriot law, as the bank is headquartered on the Mediterranean island. Yandex
shareholders will also be required to vote on the deal before it can be
finalized.
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