Tinkoff, Russia’s leading online bank, has pulled out of a $5.5bn sale to search giant Yandex that would have represented a major shake-up to the country’s tech and finance industries.
Yandex said on Friday that “it has not been able to agree definitive transaction terms with the core shareholders of Tinkoff” and that the parties had decided to conclude the negotiations.
The collapse ends a year and a half of talks over what would have been a substantial tie-up at a time when Sberbank, Russia’s largest state-run bank, is increasingly encroaching on the tech sector.
Shares in TCS, Tinkoff’s parent company, dropped more than 6 per cent on the Moscow exchange on the news, while Yandex’s shares fell nearly 4 per cent.
Yandex had sought to expand into financial services after a decade-long partnership with Sberbank collapsed this year.
Tinkoff has won plaudits globally for its sophisticated fintech but has struggled to scale its business in the face of deep-pocketed competitors such as Sberbank, which accounts for nearly half of all Russia’s retail deposits.
A sale would have also provided welcome relief for Oleg Tinkov, the bank’s founder and major shareholder, who is undergoing treatment for leukaemia in London while awaiting extradition hearings to the US on charges that he under-reported his assets by more than $1bn while taking Tinkoff public in 2018.
The talks ran aground in recent weeks over disputes about Mr Tinkov’s future role in the company, according to three people close to Yandex.
Billionaire Mr Tinkov, who originally made his fortune with beer and dumpling businesses, is not active in the bank’s day-to-day management but intended to retain his influence after the sale, the people said.
Tigran Khudaverdyan, Yandex’s deputy chief executive, wrote in a message to staff that the agreement in principle the companies announced last month “was ripped up” by Mr Tinkov.
“We constantly tried to accommodate Oleg’s additional demands. And of course we agreed that Oleg would be involved in running the bank after the deal and help Yandex more generally, which would have been logical, because he would have become a major Yandex shareholder after the deal,” he wrote.
“But unfortunately, more and more new demands appeared at every stage of the negotiations. So when we learnt today that Oleg made the decision to exit the deal, we weren’t surprised.”
Mr Tinkov wrote in an emoji-littered letter to staff that he had decided to end the deal himself after reading comments on Instagram.
“We started by talking about a MERGER, looking for synergy and quick growth of our customer base. We wanted to build the biggest private company in Russia. Essentially it all turned into a SALE — they just wanted to buy Tinkoff, with all the attendant negative consequences for us,” he wrote in a letter quoted by business news site The Bell.
“I have a plan: why don’t WE, not them, buy this shitty Yandex! I don’t believe in this bureaucratic company: D!” he added.