Russia-based global technology giant Yandex (YNDX) announced a deal worth $1 billion with Uber Technologies (UBER) to restructure their joint venture, which began in 2018 in food, self-driving, and other businesses.
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Per the terms of the deal, Yandex will buy Uber’s 33.5% indirect stake in Yandex.Eats, Yandex.Lavka, and Yandex.Delivery, along with Uber’s 18.2% interest in Yandex Self-Driving Group, thereby making Yandex the 100% owner of all mentioned businesses.
Furthermore, the deal will entitle Yandex to an incremental 4.5% interest in the newly-restructured joint venture, MLU, with a primary focus on mobility businesses, including ride-hailing and car-sharing.
With the added share, Yandex and its employees will have 71% ownership in the joint venture, whereas Uber will own the remaining 29%. (See Yandex stock charts on TipRanks)
Moreover, Yandex has received a 2-year call option to buy Uber’s remaining 29% stake in its mobility businesses for a strike price of $1.8 billion, with a maximum limit of up to $2 billion, if exercised in September 2023.
Also, Yandex will receive an extension of its license for the exclusive right to use the Uber brand in Russia and some other countries until August 2030, assuming the option is exercised.
Yandex CEO Tigran Khudaverdyan commented, “The consolidation of these businesses puts us in a great position to further increase strategic management flexibility, while creating new substantial growth potential for our businesses and cross-platform consumer benefits over the years to come, allowing us to unlock new sources of value for our shareholders.”
Morgan Stanley analyst Miriam Adisa recently reiterated a Buy rating on Yandex with a price target of $75 (2.6% upside potential).
Adisa expects group margins to increase significantly in 2023+ “as investment is subsequently pulled back”.
The analyst further added, “We think consensus has yet to factor in the high degree of investment the company is making in the (1) ecommerce and (2) taxi segments.”
Consensus among analysts is a Strong Buy based on 4 unanimous Buys. The average Yandex price target of $85.48 implies 16.9% upside potential to current levels.
News Sentiment over the past seven days is Very Bullish with 100% of the articles published being positive compared to a 66% sector average.
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