(Bloomberg) -- Russian technology firm Yandex NV is considering buying Uber Technologies Inc.’s stake in their joint ride-hailing unit instead of seeking an initial public offering of the division, according to two people familiar with the matter.
The company that operates Russia’s largest internet-search engine and ride-hailing service wants to buy all of Uber’s 38% stake in Yandex.Taxi, said the people, who asked not to be named as the discussions are confidential. Uber valued its stake in the joint venture at $1.24 billion as of March 31. After February 2021, any transfer of the joint venture is subject to a right of first refusal in favor of Yandex, according to Uber.
A spokesman for Yandex said the company is constantly reviewing different options to restructure ownership in its joint ventures and is open to discussions on this issue. A spokesperson for Uber declined to comment.
Deliberations are at an early stage and may not lead to a transaction and Yandex could still pursue an IPO for the business in the future, the people said.
The coronavirus pandemic has battered the taxi market, sending Uber and Lyft Inc. shares down and putting pressure on the valuation of other ride-hailing firms looking at IPOs. Against this backdrop, Yandex is looking at restructuring the venture given that its car-sharing business, currently not part of the Uber joint venture, may complement its taxi service, one of the people said.
Uber merged its operations in Russia and neighboring countries with local leader Yandex in a deal that closed in February 2018 and valued the unit at $3.8 billion. The unit, legally known as MLU BV, last year attracted banks including Goldman Sachs Group Inc. and Morgan Stanley to assess a U.S. share sale. Discussions on the valuation of the business ranged from $5 billion to $8 billion, Bloomberg News reported in October.
Yandex set up its ride-haling service in 2011 to add revenue streams beyond web advertising. Since the deal with Uber, Yandex.Taxi has expanded into other businesses such as food delivery and self-driving cars.
The company said in April revenues in the division grew 49% in the first quarter, and it accounted for 24% of Yandex’s sales, even as it withdrew guidance for the whole company for this year amid uncertainty due to the pandemic.
However, the Russian government’s measures to combat the spread of the coronavirus have hit demand for ride-hailing services. The company has recently invested in the business to improve affordability of taxi journeys and support drivers’ salaries, and ventured into grocery delivery.
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