Yandex exchanged media assets for food delivery

“Yandex” and VK decided on the structure of the transaction for the sale of the search news service and Zen. The companies announced their agreements on the morning of August 23. The complex structure of the transaction assumes that the yandex.ru address will come under the control of VK, and the main page of Yandex will now be located at ya.ru, the Yandex press service said.

“After the closing of the transaction for the sale of media assets – Zen and Novosti – ya.ru will become the main entry point to Search, Mail and other company services, including the user’s personal account”Yandex ID,” a spokesman for the company said.

At the same time, formally, the yandex.ru domain will still belong to Yandex, a company representative specified. “We remain the owner of the yandex.ru domain, but when you go there for a temporary transitional period, you will be redirected to the dzen.ru portal – VK owns it,” a Yandex representative told Vedomosti. The information that a redirect to the Zen website will be carried out from the yandex.ru page was also confirmed by a VK representative. How long the time period will last and what are the future plans for this page, the interlocutors did not specify.

Plans to sell Zen and the news aggregator became known back in March 2022. Now the companies have signed binding documents on the deal, which is expected to be completed by the end of the year after receiving regulatory approvals, VK said in a statement.

“After the closing of the transaction, VK will receive the rights to the technologies and trademarks of the Zen and News services,” a VK representative said. Both services will be available on the dzen.ru portal, which will also host other services and the Yandex search engine, he noted. At the same time, Zen will retain the existing content monetization tools for authors, the source added.

In exchange for media services under the terms of the deal “Yandex” will receive the Delivery Club delivery service, which VK is consolidating as part of the “divorce” with Sberbank – during the restructuring of the VK joint venture and O2O Holding bank. Thus, by the end of the year, both Sberbank and VK will cease to be the owners of Delivery Club. The Federal Antimonopoly Service has not yet received an application for the purchase of Delivery Club by Yandex, a representative of the service said.

“The parties could evaluate these assets in this way: 30 billion rubles. for Delivery Club and 30 billion rubles. together for Zen and Novosti,” Finam analyst Leonid Delitsyn believes. “But if there were any other buyer other than VK for the assets of Yandex, then he would pay half as much for them – due to the lack of synergy for their further development.” The deal between Yandex and VK essentially creates two conglomerates that are significantly ahead of all other players in this segment, and gives them the opportunity to make these businesses pay off, Delitsyn believes.

By combining the assets of Yandex Lavka, Yandex Food and Delivery club, Yandex will most likely take third place in sales in the Russian food technology market after Sberbank with its Sbermarket and Samokat and Vkusvill, says Infoline CEO Ivan Fedyakov. At the same time, Yandex will continue to have excellent prospects for further dynamic growth, he adds.

According to Infoline estimates, in the second quarter of 2022, Sbermarket’s online turnover amounted to RUB 21.2 billion. with VAT and promo, Samokat – 14 billion rubles, and Vkusvill, which is in second place – 20.5 billion rubles. In the same period, the online turnover of Lavka amounted to 9.4 billion rubles, Eda – 3.8 billion rubles, and Delivery club – 7.9 billion rubles, the expert specifies. Thus, the total turnover of the combined services could exceed 21 billion rubles already in the second quarter, which would allow the company to overtake VkusVill in terms of turnover.

Consolidation in the e-grocery market is intensifying, Fedyakov concludes. According to him, the top 10 grocery and food delivery services (which also includes online services X5 Group, Wildberries, Ozon and Lenta) already account for more than 80% of the turnover in this segment, and the threshold for joining the leaders will now be unattainable for many.

The experts surveyed by Vedomosti are cautious about the prospects for media services. “Yandex.News and Zen are fairly large services, but apart from traffic and Yandex search, their development would be very difficult.

The yandex.ru page is perhaps the most visited in Runet for PC users, Karen Kazaryan, chief analyst of the Russian Association for Electronic Communications (RAEC), draws attention. Therefore, VK needs it – for the development of media assets acquired from Yandex, he believes. At the same time, according to the analyst, mobile traffic is concentrated for the most part just on the light version of ya.ru and in the Yandex application.

Sergey Polovnikov, head of Content Review, agrees with him. “The bulk of the search queries are now made directly from the browser line, when the search engine is the default,” he added. The expert noted that even if users manually type the Yandex page, they use a shortened version of ya.ru to a greater extent. After the transaction is closed, the new owner of Zen and Novosti will quite possibly integrate them into VK services – these are social networks, and their own news aggregator, etc., Polovnikov believes.

At the end of 2021, Zen had 22.3 million active users per day, Zen’s planned revenue in the fourth quarter of 2021 amounted to 18.9 billion rubles. In Q2 2022, Yandex’s Search and Portal segment revenue grew 31% year-on-year to RUB 51.2 billion. “Zen” in the company’s financial statements for the second quarter is included in the “Other business units” section. There are no separate financial indicators for it.

“Functional”Yandex.News, most likely, will be integrated into a similar news aggregator that is being developed by VK. It makes no sense for an Internet company to keep two news aggregators,” agrees Karen Kazaryan. This service, in the context of changed legislation regarding the dissemination of information about the armed forces, begins to bear risks for the owner, the expert recalls. A similar story is with Zen, which, moreover, “takes a lot of effort and money, while they do not see development prospects for it inside the company,” Kazaryan added.

The Zen blog platform, although it is an independent service, remains a content service, which, like the news aggregator, carries risks for the owner under the changed legislation, agrees Polovnikov. The expert does not rule out that VK plans to integrate it, like news, into its own services or combine them with existing ones. In particular, Polovnikov recalled, VK has a Pulse service similar to Zen, which, however, is in many ways inferior to the Yandex service in terms of popularity.

For Yandex, a logical implementation of potentially toxic assets, Kazaryan summarizes. VK, for its part, works closely with the state, so the risks that the news aggregator and blog platform bear for this company are less, adds Polovnikov. “At the same time, this deal is also logical for VK, because the company is developing an end-to-end monetization platform for its services, which in the future will replace the monetization model for each service separately that VK currently has. In this purchase “Zen” and “Yandex.Novosti can help the company,” the expert concluded.