Multi Billion Dollar Merger between Russian Tech Firm Yandex and Challenger Bank Tinkoff has been Scrapped

    The recently proposed merger between Yandex, a major Russia-based tech firm, and banking challenger Tinkoff will not be finalized because the bank’s founder Oleg Tinkov has walked away from the deal.

    Tinkoff’s management confirmed that all negotiations between the two parties have now been “terminated, effective immediately.” Yandex and Tinkoff had previously reached an agreement “in principle” which would have led to the tech giant acquiring the challenger bank in a $5.5 billion cash-and-shares deal.

    The shares of both Yandex and Tinkoff were down by around 4% and 6%, respectively (on October 16, 2020 following the news update that the acquisition deal had been called off).

    As stated in a release published by the London Stock Exchange (where Tinkoff’s holding company TCS has been listed):

    “TCS Group Holding PLC refers to its announcement of 22 September 2020 that it was in discussions with Yandex N.V. regarding a possible cash and share offer by Yandex for the entire issued and to be issued share capital of Tinkoff. Following further discussions, including with Tinkoff’s controlling shareholder, the parties have agreed not to proceed with the Potential Transaction. Negotiations between the parties with respect to the Potential Transaction have therefore been terminated.”

    The announcement also noted that Tinkoff would be looking forward to continue to working cooperatively with Yandex on current and future initiatives.

    There were some signs or indications that the proposed deal would not materialize. Tinkov had reportedly consulted several parties about acquiring the lender which generated approximately  $500 million during the past 18 months. As reported by the Moscow Times, one of the potential buyers may have been telecom company MTS, which currently operates a small banking institution.

    Tinkoff also claims that it’s not negotiating any deals with other parties and that it will continue to operate independently (at least for now).

    One of the issues that may have led to the negotiations being called off could have been related to Tinkov’s expected role after the deal had been finalized. At present, Tinkov is being treated for acute leukemia at a hospital in London. He’s also dealing with U.S. led extradition charges because he may owe as much as $1 billion in taxes.

    Tinkov wrote a letter to the bank’s workers in which he noted:

    “Today, I decided to cancel the potential deal with Yandex. Why? We started talking about merging, a search for synergies and rapid growth of customers. They wanted to build the largest private company in Russia. In fact, it turned into a sale. They just wanted to buy Tinkoff, with all the resulting negative consequences for us. Tinkoff will not be sold to Yandex or MTS.”

    Tigran Khudaverdyan, deputy CEO at Yandex, stated:

    “We agreed that after the deal Oleg [Tinkov] would have participated in the management of the bank and helped Yandex. It was logical, because after the deal Oleg would have become a major shareholder in Yandex. Unfortunately, after every stage of the negotiations, more and more requirements appeared. Therefore, when we learnt today that Oleg decided to back out of the deal, we were not surprised.”


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