Yandex (NASDAQ and MOEX: YNDX), one of Europe's largest internet companies and the leading search and ride-hailing provider in Russia, has announced that it has entered into a binding agreement with Uber to restructure the ownership of their joint ventures, MLU B.V. (“MLU”) and Yandex Self-Driving B.V. (“SDG”).
Under this agreement, for total consideration of $1.0 billion in cash, Yandex will receive:
Uber’s 33.5% indirect interest in Yandex.Eats, Yandex.Lavka and Yandex.Delivery, giving Yandex 100% ownership in all three businesses;
Uber’s 18.2% interest in Yandex Self-Driving Group (SDG), giving Yandex 100% ownership in the business; and
An additional 4.5% interest in the newly restructured MLU, which will focus on mobility businesses, giving Yandex and its employees a total of approximately 71% ownership in the joint venture. This includes:
approximately 68.3% ownership of Yandex and management in the joint venture; and
approximately 2.8% reserved for employee equity incentive program of MLU.
In addition, Yandex receives a two-year American call option to acquire the remaining 29% of Uber’s interest in the newly restructured MLU at a strike price of $1.8 billion, subject to agreed increases over the option period - going up to approximately $2.0 billion if exercised in September 2023. The newly restructured MLU will continue to focus on mobility businesses, including ride-hailing and car-sharing.
Yandex will also get an extension of the current license for the exclusive right to use the Uber brand in Russia and certain other countries until August 2030, assuming exercise of the option.
“Since we started our partnership with Uber in 2018, we’ve been able to create and rapidly develop a number of successful businesses -- all of them are highly synergetic to our e-commerce initiative and to the entire Yandex ecosystem. The consolidation of these businesses puts us in a great position to further increase strategic management flexibility, while creating new substantial growth potential for our businesses and cross-platform consumer benefits over the years to come, allowing us to unlock new sources of value for our shareholders,” said Tigran Khudaverdyan, Deputy CEO of Yandex.
The transaction will be implemented in two stages:
Stage 1: Acquisition of 4.5% of MLU and 18.2% in SDG (expected to be closed by the end of the third quarter 2021).
Stage 2: Demerger of Yandex.Eats, Yandex.Lavka and Yandex.Delivery from MLU and subsequent acquisition of Uber’s interest in these businesses (expected to be completed by the end of 2021).
The transaction has been approved by the Boards of Directors of Yandex and Uber. Shareholder approval is not required. The approval of Yandex’s Class A shareholders may be required for the purchase of Uber’s remaining interest in MLU pursuant to the call option. The transaction is not subject to antitrust or other regulatory approvals.