Yandex, Polymetal shareholders set to approve major Russian exit deals


March 7, 2024

Two of Russia's largest corporate exit deals since Moscow's invasion of Ukraine are up for shareholder approval on Thursday, with "Russia's Google" Yandex and major mining assets set to pass to Russian ownership in transactions totaling around $9 billion.

Dutch-registered Yandex NV, struck a 475-billion-rouble ($5.27 billion) deal to sell its local subsidiary - Russia's most valuable technology asset - to Russian investors, while precious metals producer Polymetal International is selling its Russian assets to a Siberian gold miner for about $3.7 billion.

Both deals, the result of months of negotiations, are at heavily discounted prices - Yandex due to Kremlin demands on foreign asset sales and Polymetal because of sanctions and a small circle of buyers. That said, few other firms have managed to extract as much from Russia.

In pitches to shareholders, Yandex listed seizures of assets owned by Danone and Carlsberg and restrictive laws Moscow has introduced since launching its war in Ukraine, while Polymetal explicitly cited nationalisation risk.

"Delaying the exit from the group's Russian assets could jeopardise its overall feasibility," Polymetal said.
Shareholders stand to lose out. Yandex, whose shareholders include Fidelity, BlackRock, and Morgan Stanley, was valued at around $30 billion shortly before the war. The deal envisages a market capitalization of just over $10 billion.

But the agreed deal, taking into account the 50 percent discount and highly restrictive framework, should have ample cause for investor support, said proxy advisory firm Glass Lewis in a report.
"The proposed arrangement appears to represent the most reasonable outcome in a set of decidedly unfavorable conditions over which Yandex wields substantially no influence," Glass Lewis said.

The majority of votes received have been in favor, a person with knowledge of the Yandex NV voting procedure told Reuters.
Polymetal is unlikely to face opposition from its new, major shareholder, an Omani state-owned consortium, and the transaction requires a simple majority.

Should the deals be approved, both companies would be free to re-engage with Western markets for funding and partnerships as they seek to rebuild.

Yandex NV plans to develop four nascent businesses, focused on artificial intelligence, data labelling and self-driving cars, internationally, while Polymetal wants to fund projects in Kazakhstan.

Both companies have highlighted that the war and sanctions are to blame for their respective predicaments.

"Your investment certainly has been decimated, but management was not the root cause of this destruction," Polymetal chief executive officer Vitaly Nesis told investors in February.
($1 = 90.1400 roubles)

(Reporting by Alexander Marrow; Editing by Elaine Hardcastle)



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