The effect of takeover talks with Sberbank on Yandex business and stock
Russia’s largest bank, state owned Sberbank, was reportedly negotiating about acquiring control in the Russian largest internet company Yandex. As a defense from a possible takeover, Yandex now considers a reorganization of its voting shares structure. We’d like to review the situation in terms of Yandex’ stock outlook.
1. The news on negotiations with Sberbank dropped Yandex shares by 30%, and they haven’t recovered fully yet. Why did the market react so negatively? Which negative/positive effects a potential takeover may have on Yandex’s business? How might it affect other Russian tech stocks (eg. Mail.Ru Group)?
2. Two weeks later, Yandex announced a major reorganization of its voting stock which is viewed as defense against a takeover (https://www.kommersant.ru/doc/3786372). The company will issue a new class of shares that would hand 60% of voting control to a fund run by its CEO. Is it an efficient way to protect the company? How would this reshuffling affect class A shareholders (market investors)?
3. Given the aforementioned circumstances, what is your medium term outlook for Yandex stock and other Russian tech stocks, taking into account both fundamental and news-driven factors?
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Date of publication: 06/12/2018