Yandex shares soar

RUSSIA / FSU POLITICS - In Brief 25 Sep 2020 by Alex Teddy
On September 23 Yandex shares leapt 13% to their highest level after Yandex signed a deal with Tinkoff for USD 5.5 billion. The previous day they had jumped 11%. The shares have since fallen back considerably but they are still substantially above where they were on September 22. Yandex is likely to be Russia's main tech player. Tinkoff is Russia's main online bank.Yandex shares now cost USD 69. That is a threefold YoY increase. Yandex is on the Nasdaq and has its HQ in the Netherlands.The agreement is in principle. It involves a cash and shares deal for TCS which is the holding company of Tinkoff. Yandex will entirely absorb Tinkoff. There remains due diligence and shareholder vote to clear. The two companies are customer focused and forward thinking in terms of digital. Both are likely to become even more profitable.Yandex's capitalization is four times greater than Tinkoff. Yandex made a profit of USD 180 million in 2019. Tinkoff made USD 500 million. Yandex and Sberbank tried to form a parnership with Sberbank in 2018.Yandex has USD 3 billion on the balance sheet in June 2020.Yandex is going to be a market leader in fintech. Sberbank's alliance with Mail.Ru will be a rival.Yandex has a lot of customer data. This will be advantageous to Tinkoff. Yandex will control transactions infrastructure. Tinkoff's cashflow will help Yandex finance some projects that are expensive to begin with such as self-driving vehicles. The risks associated with the merge are that banks are highly complex and regulated. Yandex does not have a lot of in house financial expertise. These are some risks peculiar to banks and Yandex will now face these. 70% of assets in financial service sector...

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