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Photographer: Alexander Zemlianichenko Jr./Bloomberg
Technology

Yandex’s $5.5 Billion Deal for TCS Collapses as Tinkov Balks

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Yandex’s $5.5 Billion Deal for TCS Collapses as Tinkov Balks

  • Tinkov rejected deal as more an acquisition than a merger
  • Sberbank is ‘clear winner’ from deal’s failure, analyst says
Yandex NV Launches Voice Controlled Infotainment System
Photographer: Alexander Zemlianichenko Jr./Bloomberg

Russian internet firm Yandex NV’s deal to buy the country’s largest online lender TCS Group Holding Plc collapsed as the bank’s founder balked during negotiations.

Yandex said last month it reached a preliminary agreement to buy 100% of Tinkoff Bank’s parent company for $5.5 billion in cash and shares. On Friday, Yandex and TCS said in separate statements that the talks were terminated.

“We started talks about a merger to build Russia’s biggest non-state company,” billionaire TCS founder Oleg Tinkov said in a letter to employees Friday that was seen by Bloomberg. “It turned out they just wanted to buy Tinkoff Bank.”

A TCS spokesperson declined to comment on the letter. TCS is not in talks with any other companies and plans to develop Tinkoff Bank independently, its press service said.

The proposed deal would have posed a challenge to Yandex’s former partner, state-owned Sberbank PJSC, after they dissolved their joint ventures and ended a non-compete agreement in June. Sberbank, which is the successor of the Soviet Union’s savings bank, is attempting to reposition itself as a technology company that can provide customers with services from taxis to telemedicine.

New Requirements

Yandex now plans to develop its fintech capabilities on its own, Deputy Chief Executive Officer Tigran Khudaverdyan wrote in a letter to employees seen by Bloomberg and confirmed by the company press office.

“We were constantly making concessions to Oleg and were eager to keep his role in managing the bank and helping Yandex as well,” Khudaverdyan said. “Unfortunately, after each stage of negotiations Oleg raised new requirements.”

TCS shares fell as much as 6.3% to the lowest level since July and was down 1.7% to $23.55 in London. Yandex slid as much as 2% in New York.

Sberbank’s attempt to pivot toward technology is a “clear winner” from the collapse of the deal as it will have more time to develop, VTB Capital analyst Mikhail Shlemov wrote in a note.

“Yandex is back to square one in terms of its fintech vertical development which, together with e-commerce, is at the top of its to-do list,” Shlemov said.

(Updates with comments starting in third paragraph)