Yandex Drops $650 Million Office Purchase After Ruble ReboundsBy
Russian search engine planned deal to cut dollar-linked costs
Yandex to walk away from agreement after paying up to $700,000
Yandex NV, Russia’s largest search engine, will walk away from a deal to buy its Moscow office for about $650 million after its share price rebounded and the ruble reversed a slide against the U.S. dollar.
Yandex will pay up to $700,000 to cancel the deal, which was meant to cut dollar-linked rental costs and protect its profit margin, according to a company statement Thursday. Chief Financial Officer Greg Abovsky told investors in July that any penalties wouldn’t be material.
“Terminating the agreement was the right choice for Yandex,” Svetlana Sukhanova, a technology analyst at Sberbank CIB in Moscow, wrote in a note to clients, explaining that the cost per square meter was higher than the market average. The bank has a hold recommendation on the stock. “The benefits from backing out of the deal are far higher than the related costs."
In February, the Internet company agreed to buy its Moscow headquarters for $490 million and 12.9 million shares, which were worth about $160 million at the time. Yandex shares have surged 74 percent since then, while the ruble reversed a slump, gaining 20 percent against the U.S. currency.
Yandex rose 1.4 percent as of 11:35 a.m. in Moscow, after dropping 1.6 percent on Wednesday. The shares closed down 0.2 percent to $22.01 in New York.