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Uber’s final exit from Russia: Yandex buys Uber’s stake in Taxi JV for $703 million

Updated: Oct 30, 2023




Deal Overview


On Monday 21st April, Russia’s tech giant Yandex bought Uber’s 29.98% stake in their joint taxi venture, Taxi JV, for $702.5 million – becoming the sole owner of the Yandex Taxi business and bringing Uber’s involvement in Russia to a close. Whilst the companies had joined forces in Russia in 2017 to combine their ride-sharing businesses in Russia and neighbouring countries, the former partners had engaged in extensive restructuring in 2021 which had already resulted in Yandex Delivery and Yandex SDH becoming 100% owned by the Russian company. As follows, Yandex’s move to become the sole owner of the Yandex Taxi group can be considered an accelerated continuation of Uber’s policy to exit Russia following its invasion of Ukraine, as well as sell its peripheral operations in a bid to increase the tech transportation company’s profitability.


Deal structure


Corporate exits from Russia now require approval from a government commission, in light of capital outflows and unprecedented sanctions against Moscow over the war in Ukraine. Yandex said the deal had received regulatory approval. Measures introduced in late December stipulate that asset sales are permitted provided a 50% discount is given to the buyer following an independent valuation. Yandex did not mention any discount. Importantly, the deal will not affect users of the service in any way. Per the terms of the deal, Yandex will retain the right to use the Uber brand in Russia and neighbouring countries until 2026.


Due to its time-sensitive nature, the transaction was made through an agreement and not the implementation of a call option – which the parties had entered into in 2021 as part of the restructuring of the joint venture. As follows, whilst the option to buy out the remaining 29% of Taxi JV from Uber was valued at $1.8-$2 billion in 2021, the present sale price of $703 million had been adjusted to account for the accelerated sale of the stake, which went contrary to the option rule.


In the wake of the sale, three Uber executives resigned from the board of Taxi JV. Uber has said that a single non-executive representative will keep overseeing the rest of the divestiture.


Yandex overview


Yandex is a Russian multinational technology company that provides internet-related products and services, including e-commerce, transportation, maps, mobile applications, and online advertising. It primarily serves audiences in Russia and the former Soviet Union and has more than 30 offices worldwide. The firm is the largest technology company in Russia and the second-largest search engine in Russia with a market share of over 58%.


Yandex’s search engine was first launched in 1997 and was presented at the Softool exhibition in Moscow. Initially, the search engine was developed by Comptek, but in 2000 Yandex was incorporated into a standalone company by Arcady Volozh (who went onto serve as Yandex’s CEO until 2022.) In 2022, Yandex announced it was selling its media division after the EU sanctioned the former head of its news operations. CNN also reported in March 2022 that Yandex warned it may not be able to pay its debts due to sanctions imposed on Russia. In late November 2022, Yandex announced a review of its ownership with the goal of divestment. Yandex remains privately owned.


Date founded: 1997


Number of employees: 20,850 (2022)


EV: $7.72B


LTM Revenue: $578.96B


LTM EBITDA: $58.22B


Market Cap: $6.80B


Yandex Taxi - Taxi JV overview


Founded in 2011, Yandex Taxi is an international company that operates taxi aggregation (Taxi JV) and foods tech businesses (Yandex.Eats) across Russia and CIS. Accordingly, Taxi JV is among the world’s leading developers of self-driving technology. Taxi JV operates in more than 1000 cities, including 300 large cities across Russia, Belarus, Moldova, Armenia, Georgia, Latvia, Estonia, etc. More than 700,000 drivers are connected to the network. In 2020, Taxi JV was reportedly developing AI-infused proprietary hardware and software for its vehicles that monitor drivers’ attention levels, as well as a facial recognition system that determines the identity of the person behind the shell.


In April 2022, Taxi JV was banned in Estonia due to the Russia’s requirement that it shares users’ data with the government. Estonia has encouraged other European countries to apply sanctions to the company as well.


Industry insight


Russia – the repercussions of the war and geopolitical tensions


The ongoing war and geopolitical tensions have had significant economic repercussions for businesses in Russia Sanctions imposed by Western countries have limited access to capital, technology, and markets. Russian businesses face challenges in expanding internationally and accessing foreign investment, which can impact their growth potential. Additionally, Russia has experienced an increase in market volatility due to the uncertainty surrounding the war. Fluctuations in currency exchange rates, stock markets, and commodity prices can, in turn, pose challenges for businesses operating in the country. Finally, information security and concerns over data privacy have become increasingly important for businesses in Russia. Geopolitical tensions between Russia and the West have heightened scrutiny on cybersecurity practices and data protection, both domestically and internationally. Companies need to invest in robust information security measures and comply with regulations to maintain trust with customers, partners, and regulatory authorities.


Growth in urban populations in Eastern Europe


As urban populations grow and mobility needs increase in Eastern Europe, more individuals are relying on taxi services for their daily transportation. Accordingly, companies such as Yandex Taxi have been able to capitalise on this trend by expanding their fleet and service coverage, offering a convenient and reliable transportation solution to their customers.


Technology and innovation in the car and taxi industry


Car and Taxi companies continue to invest heavily in technology and innovation to enhance their services and improve the customer experience. Yandex Taxi, for example, has leveraged advanced technologies such as AI and machine learning to optimise route planning, reduce wait times, and personalise the user experience.


Strategic rationale


Uber’s move to sell its stake in Taxi JV much faster than anticipated by the agreed 2021 call option comes in light of Russia’s invasion of Ukraine. The decision aligns with similar moves made by private US companies like Google, Apple, and Netflix that have sought to cut ties with Russia.


Furthermore, concerns that Taxi JV is illegally harvesting user data prompted Estonia’s transport and economy minister on Monday to ask Google and Apple to remove the app from their respective app stores, citing national security concerns. Yandex has denied the allegations and stated that the app complied with EU data regulations. Nevertheless, cybersecurity incidents can pose a significant risk to a company’s reputation and the incident in Estonia raised concerns for Uber as a shareholder. Selling its shares could be a way for Uber to distance itself from future potential regulatory repercussions or complications arising from cyber security incidents.


Uber’s move to sell Taxi JV also follows a pattern that Uber has started over the past 24 months, in which the technology firm has sold off its driverless car and private flying as it looks to become profitable. Accordingly, Uber’s sale marks the end of what has been a very rocky ride for Uber in Russia – as per documents presented for Uber’s IPO in May 2019, Uber had already lost $42 million through its joint ventures with Yandex beginning in 2017. Additionally, Uber is keen to focus on operations and changes at home, trying to build back its workforce after the pandemic depleted it.


Long term prospects


The ongoing war and geopolitical tensions in Russia will have a significant impact on the taxi industry. Economic sanctions, changes in regulatory frameworks, and shifts in market dynamics can all potentially impact Taxi JV’s operations and growth prospects. The extent of these effects will surely depend on the unpredictable duration and intensity of the conflict. Nevertheless, Yandex Taxi’s success in the long term will depend on its ability to adapt and innovate technologically. The integration of advanced technologies like artificial intelligence, machine learning, and autonomous driving will shape the future of the taxi industry. And, given the company’s existing emphasis on investing and developing such technologies, Yandex Taxi is well placed to compete in the ride-hailing industry’s competitive market. However, Yandex would do well to maintain a strong brand reputation free of cybersecurity concerns if it hopes to continue to expand in international taxi markets following the war.


Written by Felicite Baroudel (The Queen’s College)


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