Russia's Yandex to acquire TCS Group's online bank Tinkoff for $5.48 bn

Russia’s Yandex NV, one of Europe’s largest internet companies and the leading search and ride-hailing provider in Russia, on Tuesday confirmed that it has reached an agreement to acquire 100 per cent stake in banking group TCS Group Holding plc’s online banking operation Tinkoff, for approximately $5.48 billion or $27.64 per Tinkoff share.

The valuation, based on the closing price of Yandex shares on 21 September 2020, would represent a premium of approximately 8.0 per cent to the closing price per Tinkoff GDR of $25.60 on 21 September 2020, according to a company release.
Yandex said the two sides have come to an agreement in principle on a transaction that would consist of cash and share consideration worth approximately $5.48 billion or $27.64 per Tinkoff share.
This is equivalent to 10.4 per cent of the volume weighted average closing price per Tinkoff GDR of $25.04 for the one-month period ended on 21 September 2020; and 16.9 per cent of the volume weighted average closing price per Tinkoff GDR of $23.65 for the three-month period ended on 21 September 2020.
The final terms are subject to the satisfactory completion of due diligence and agreement on definitive documentation, including agreement regarding conditions to closing.  There can be no certainty that any firm offer will be made for Tinkoff, nor as to the final terms on which any firm offer might be made, Yandex said.
Yandex and Tinkoff propose to implement the potential transaction by means of a scheme of arrangement of Tinkoff under Cyprus law.
The Proposed Transaction would be subject to the approval of Yandex’s Class A shareholders at a general meeting. If the potential transaction proceeds, Yandex will provide notice of its shareholders meetings and accompanying documentation in due course, it added.
Tinkoff is the world’s largest bank that is fully online, with more than 10 million customers across Russia.
Yandex had a few months back announced that it was terminating its partnership with Sberbank, and the acquisition of Tinkoff opens the door for Yandex to compete with the country’s largest bank.
The deal will give Yandex potential synergies in data and products, but also exposes it to banking risks, which means it is crucial to retain the TCS management team, Maria Sukhanova, an analyst at BCS brokerage.