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Why Yandex Stock Soared Today

By Evan Niu, CFA – Sep 22, 2020 at 4:55PM

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The Russian search engine is in talks to acquire Tinkoff Bank to expand its technology ecosystem.

What happened

Shares of Yandex (YNDX -6.79%) soared 12% today after the search engine specialist confirmed that it is in talks to acquire Tinkoff Bank. The two companies have been discussing a possible combination for over a year.

So what

Yandex and Tinkoff parent TCS Group have tentatively agreed "in principle" to a deal in which the Russian search engine and ride-hailing platform would acquire 100% of Tinkoff shares in a cash-and-stock transaction valuing the online bank at $27.64 per share, based on Yandex's closing price yesterday. The total deal would be worth nearly $5.5 billion.

Rising green stock chart

Image source: Getty Images.

The acquisition has not been finalized and Yandex warns that there is uncertainty regarding whether a firm offer will be made or what the final terms might be. Yandex did not disclose how much of the deal would be made up of stock compared to cash, but the proportion is expected to be about half and half, according to Reuters.

Now what

Yandex recently cut ties with long-standing financial partner Sberbank, as the relationship had been deteriorating for years. Yandex is the leading search engine in Russia and Tinkoff has over 10 million customers in the country.

In 2019, TCS Group founder Oleg Tinkov suggested a tie-up to Yandex co-founder Arkady Volozh, and rumors circulated around the time that Yandex was looking to acquire 25% of Tinkoff shares. The vision is to create an expansive technology platform that offers a variety of online services, such as search, ride-hailing, and payments -- not unlike Tencent's WeChat in China.

Evan Niu, CFA owns shares of Tencent Holdings. The Motley Fool owns shares of and recommends Tencent Holdings and Yandex. The Motley Fool has a disclosure policy.

Stocks Mentioned

Yandex Stock Quote
Yandex
YNDX
$18.94 (-6.79%) $-1.38
Tencent Stock Quote
Tencent
TCEHY
$39.91 (2.53%) $0.98

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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