“Yandex” announced plans for the division of the company

On November 25, Yandex announced plans to split the group’s assets. A number of businesses, including autonomous cars, cloud technologies and others, will continue to operate in Russia, but their international parts will be spun off into separate companies managed by a company in the Netherlands, the statement said. The details of the changes have not yet been announced. “All proposed changes will have to be approved by Yandex NV shareholders,” the company’s press service added.

The main part of Yandex NV’s business, taking into account a number of foreign directions, can be separated into a separate group of companies that will retain the Yandex brand, the company said in a statement. “Dutch Yandex NV plans to eventually withdraw from the shareholders of this group of companies and change its name,” the Yandex press service said. Such a scheme implies a decision of the board of directors “on preliminary intentions.”

“The possibility of changing the corporate structure is also being considered, in which the management of the spun-off group of companies will be transferred to the management of Yandex,” the company announced. The changes will allow it to continue to focus on building technology products and services. Yandex will continue to develop as a private independent group of companies, operate on the open market and compete with local and global players,” the company’s press service assured.

As of September 30, 2022, Arkady Volozh’s family fund controlled 45.1% of voting shares and 8.5% of ordinary shares, according to the Yandex website. Another 46.3% of the voting shares and 87.6% of the company’s share capital were in free float. Employees of the company, including top management, held 6.6% of voting shares and 3.2% of ordinary shares. “In total, the Volozh trust and other employees of the company have more than 50% of the votes. At the same time, almost 88% of the economic rights to the company are held by holders of class A traded shares, which are accounted for in free float,” explains Artem Mikhaylin, an analyst at Veles Capital.

In 2019, against the backdrop of a draft law on limiting foreign ownership in significant Internet companies being discussed in the State Duma, Yandex changed its management structure. The Public Interest Fund was created, to which the so-called “golden share” was transferred, with the help of which it can block transactions for the consolidation in one hand of 10% or more of the voting or economic shares of an Internet company. A bill to limit foreign ownership in such companies was never passed.

Yandex’s revenue under IFRS in 2021 grew by 54% to 356.2 billion rubles, for the nine months of 2022 it amounted to 356.9 billion rubles, exceeding the total annual revenue for the entire previous year. EBITDA for the nine months of 2022 amounted to 46 billion rubles, net profit – 40.56 billion rubles.

The separation of assets will help Yandex cope with a number of problems at once, experts and analysts interviewed by Vedomosti explain.

“Often, when deciding on the restructuring of ownership in relation to large holdings, the issues of security of ownership and corporate protection of assets are the main ones even in comparison with the objective tax burden – probably, in this case, they could not be the last driver when deciding to move the holding,” – adds Anna Zelenskaya, associate partner of MEF Legal’s tax practice.

“The deal will solve problems with the development of new Yandex technologies abroad and their sale on world markets, and the Russian part of the business will be able to work in Russia, observing Russian laws,” says Alexander Volchkov, a consultant on financing and structuring transactions.

Of all the foreign assets of Yandex, the most active division is now the taxi segment, as well as food delivery units, analysts interviewed by Vedomosti say. These divisions are developing in the CIS countries, as well as in the Middle East region and Latin America, notes Denis Buivolov, an analyst at “BCS investment world. But the share of Yandex services in foreign markets is extremely small, recalls Leonid Delitsyn, an analyst at FG Finam.

According to Mikhailin, the Yandex taxi service now operates in at least 17 countries. “Relatively small volumes also have search, cloud and geoservices. “Yandex.Lavka remained in Israel, and the project in Paris and London had to be curtailed,” he notes.

The self-driving vehicle segment has “excellent long-term opportunities for generating revenue,” but at the moment it is not worth expecting a significant contribution to revenue from it, Buivolov believes. “Testing of unmanned vehicles in the United States has also been curtailed, but some projects may continue to work in Israel. Autonomous transport generates almost no revenue, at best, several tens of millions of rubles per quarter. Expenses now amount to 1.5-2 billion rubles. per quarter at the level of EBITDA,” Mikhailin concluded.

Like any other large Russian company, in 2022 Yandex was under the pressure of sanctions and geopolitics. “The company’s capitalization has been actively declining since the second half of 2021, along with the entire Russian market, and has gone down sharply after the February events,” Mikhailin says.

According to him, after that there was a period of “gradual smooth recovery and again falling against the backdrop of the announcement of partial mobilization.” Now the capitalization is recovering and is about 700 billion rubles, he continued.

“Despite the partial recovery of quotes from the bottom, the current value of the shares is still at the level of 35% of the peak values,” Buivolov added. According to him, since trading in the company’s shares abroad has been suspended since February, their price on the Moscow Exchange serves as a reference point for quotations. “At the peak of last year, the share price was around 6,000 rubles. per share, at the lowest levels of this year, the price was around 1,350 rubles,” Buivolov added. Now “Yandex” is “more than 2 times cheaper than a year ago,” Mikhailin concluded.

Despite the fact that the group itself did not fall under the sanctions of any countries, its top managers were under the restrictions. In mid-March, Tigran Khudaverdyan, CEO of Yandex in Russia, fell under EU sanctions, after which he left his post. And in June, Volozh was also sanctioned. The company then announced that he was leaving the posts of executive and general directors in the parent company of the Yandex NV group in the Netherlands, and also transfers his voting rights to the board of directors.

In mid-May, the Israeli edition of Calcalist reported on Volozh’s plans to move the headquarters of Yandex to this country. It was noted that it was about “hundreds of programmers, engineers and technology specialists.” It was also reported about plans to split the company into two parts: one will remain in Russia, and the second – international – will be in Israel. But the press service of Yandex then stated that the transfer of headquarters from Moscow or the relocation of teams is not planned.

Also in May, sources from Meduza (recognized as a foreign agent in the Russian Federation) reported that since February, out of 18,000 Yandex employees, 3,000–5,000 had gone abroad. According to the interlocutor of Vedomosti, who knows this from the company’s employees, now about 30-40% of its employees work from abroad. “But I believe that most of them plan to return to the country in the medium term,” he notes. The representative of “Yandex” said that “these figures are not true.” How many employees of the company work from other countries, he declined to specify.

For several months, the media have been writing about the possible change of the head of the Accounts Chamber (CA), Alexei Kudrin, for several months, but officially this possibility has been repeatedly refuted. For example, on June 30, Meduza reported on its alleged plans to move to Yandex, and in response, the company’s press service told Forbes that there were only “several working meetings over the past 2-3 years” with the team of the chairman of the joint venture. opportunities for the development of digital projects. On September 16, Meduza already wrote that Kudrin had asked the president himself to join the Yandex board of directors, whom he knew from his work in St. Petersburg.

“No, it wasn’t, it wasn’t. We don’t read Meduza anymore,” Dmitry Peskov, press secretary of the head of state, said in response.

Shortly thereafter, on September 23, Forbes reported that Volozh offered Kudrin 5% of the company for helping to separate the company’s Russian and international business. Already on November 23, before Yandex’s official announcement of its decision, The Bell reported that Kudrin would meet with Putin to discuss the project. According to Vedomosti’s source close to the presidential administration (AP), he is not aware that “it was planned to publish such communications.” After the alleged conversation took place, a pool of Russian media reported this with reference to sources: RIA Novosti, TASS, RBC. “I can’t confirm anything, I have nothing to add to what I said,” Peskov told reporters after that.

Such negotiations, even if they take place, do not mean a mandatory one-time decision on the personnel decision on the head of the joint venture. Formally, Kudrin’s first term as chairman of the joint venture does not expire soon: in May 2024. Moreover, the head of the supervisory body can be appointed for two terms, if the letter of the law on the joint venture is followed.

However, on the evening of November 27, RBC, citing sources, reported that Kudrin as chairman of the joint venture could be replaced by the first vice speaker of the State Duma, former deputy chairman of the Russian government (2004-2011) Alexander Zhukov, who is responsible for interaction with Bely from the lower house of parliament. home. According to Zhukov’s representative, she knows nothing about his new appointment. But two interlocutors of Vedomosti in parliament said they had heard about the discussion of this candidacy for the post of head of the joint venture, and one of the interlocutors on Okhotny Ryad noted that the discussion had been going on for several weeks.

However, in addition to Zhukov, the names of other candidates for moving to the Joint Venture were also mentioned, two interlocutors of Vedomosti spoke in parliament, naming Andrei Makarov, chairman of the budget committee, in this capacity. Those around him noted that they would prefer to be guided by specific facts, rather than rumors.

For the first time since 2000, acting deputies became contenders for the post of chairman of the joint venture, notes political scientist Pavel Sklyanchuk: “Sergey Stepashin, Tatyana Golikova, and Alexei Kudrin himself have never been elected to the State Duma and were not associated with it.”

The replacement of the head of the supervisory body actualized the issue of the inconsistency of the law on the joint venture with the Constitution amended in 2020. Now, according to its 102nd article, the appointment and dismissal of the chairman of the joint venture is the responsibility of the Federation Council (SF), and not the State Duma, as before (for example, it was the deputies who voted for the appointment of Kudrin as head of the joint venture in 2018). But no other acts – neither the law on the joint venture, nor the regulations of the chambers of the Federal Assembly – the legislators have not corrected.

This legal inconsistency was pointed out on Friday, November 25, by the first deputy head of the Federation Council committee on budget and taxes, Sergei Ivanov, who represents the upper house of parliament in the joint venture. However, the question of Kudrin’s resignation and the appointment of another chairman of the joint venture is not on the agenda of the State Duma. Dmitry Vyatkin, a member of the State Duma Committee on State Construction, explained this by saying that “there is no conflict in this case”: “The Constitution is a document of direct action, and its norms, especially those that are not referential, are applied directly. In this case, the norm is clearly formulated. Chairman of the Federation Council Committee on Constitutional Legislation Andrei Klishas also believes that “the absence of sectoral norms does not affect the operation of the Basic Law, which should guide all public authorities.”

Pen & Paper lawyer and ex-senator Konstantin Dobrynin agrees that the norms of the Constitution, as a document of direct action, in the case of consideration of the personnel issue in theory, can really prevail over the law, although he remembers rather the opposite practice: “But what does all this matter now?” .-

Evgenia Kuznetsova contributed to the article