Page 6 - bne_Tech_02_2021

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February 2021 www.intellinews.com I Page 6
Curtailed Vezet deal still seen as positive for Yandex.Taxi
The acquisition of the assets of Vezet taxi operator by Yandex.Taxi joint venture of Uber Technologies and Russian internet major Yandex is seen as positive for the latter, as it would strengthen Yandex.Taxi’s presence in Russia’s regions and support Yandex.Taxi’s logistics services, the analysts believe.
As reported by bne IntelliNews, Yandex.Taxi has acquired the call centres and service of cargo transportation orders of Vezet group for $178mn. Yandex first snapped up Vezet from its rival Mail. ru in 2019, in a major deal that included 3.6% equity and $71.5mn in cash. With a market share of about 12%, Vezet was seen as significantly strengthening Yandex.Taxi's position, especially in the regions.
However, Russia's Federal Antimonopoly Service (FAS) blocked the acquisition of Vezet in May 2020. FAS argued that the joint market share of the
two companies would be 70%, and at over 80%
in nineteen regions of the Russian Federation.
"Compared to the deal announced in 2019, the scope of this one is narrower, the value of the transaction is effectively smaller and FAS approval is not required," Sova Capital commented on February 3, while seeing the deal as positive.
"Our valuation of Yandex.Taxi in 2019 (c. $5.9bn) implies that the acquisition of Vezet Group’s assets would have cost Yandex.Taxi c. $284mn under the original deal, around 1.6x higher than the current price ($178mn)," Sova estimates. Yandex commented to Vedomosti daily this week that the new deal is more limited in scale, as
it only includes some assets of Vezet, does not include all its geographies, and does not include Vezet's software.
Still, some integration will take place, with Vezet users able to integrate Yandex Go app, while the drives working for Vezet could join Yandex.Pro platform.
The deal should help Yandex.Taxi to strengthen the presence of its core B2C ride-hailing business in Russia’s regions, as Vezet Group has historically had a strong position in cities with populations below 1mn people, Sova analysts remind, while affirming a Buy call on Yandex shares.
"We welcome the deal and consider it to be complementary, as it strengthens Yandex.Taxi's position in regions outside Moscow, which have become the main competitive battleground," Sberbank CIB wrote on February 3.
The analysts at Sberbank CIB believe the potential synergies should exceed the investment incurred, rendering the deal value-accretive, while also reiterating a Buy rating on Yandex.
While BCS Global markets also sees the strategic rationale in acquiring Vezet, the analysts find
the deal neutral in Yandex’s scale. "The deal’s value is 1.5-2 less than planned in mid-2019, but Vezet’s market positions could have worsened since, considering pressure from epidemiological measures," BCS GM warns, while reiterating
a Hold rating on Yandex shares.