Russia’s Yandex Looks to Sell Its Services in Israel Amid Critical Losses

Sources said the company would likely earn hundreds of millions of shekels should it sell all three of its scooter, taxi, and delivery services in Israel, but its unclear whether it can close the necessary deals

Omri Zerachovitz
Omri Zerachovitz
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Yango DeliCredit: Tomer Appelbaum
Omri Zerachovitz
Omri Zerachovitz

Russian company Yandex has decided to sell several of its key Israeli assets and may have already begun meeting with buyers, according to sources close to the deal, after it was undermined by Russia's invasion of Ukraine.

The three main operations it looks to sell are its Yango taxi service; Yango Deli, a delivery service; and Wind, a scooter service that Yandex bought less than a year ago for between $20 million and $30 million.

Sources involved in these industries said the company would likely earn hundreds of millions of shekels should it sell all of them, but are uncertain if all will end up being sold.

Yandex is a technology giant that developed a popular Russian search engine and has therefore been dubbed “the Russian Google.” Its other developments include automated vehicles, food tech, cloud services and ecommerce.

In recent years, Yandex has viewed Israel as a strategic market and begun developing various operations here. Its decision to sell its taxi, delivery and scooter business was motivated by the simple fact that all three are losing a lot of money.

That’s also why Yango Deli closed several branches in recent months. Today, it has just 18, but only a handful of those are thought to be profitable.

The company’s taxi business is also burning through a lot of money. In the past, Yandex had hoped that regulations would change to allow drivers to adjust fares based on demand, the amount of traffic on the roads and other factors, rather than using a fixed per-kilometer rate as taxis currently do. It argued that such variable pricing was the key to profitability.

For years, the local taxi market has been dominated by Gett, but Gett is now having problems. Under other circumstances, this would have given Yandex a window of opportunity.

As for Wind’s scooters, Tel Aviv is actually considered a strong market for this business. Yet this operation, too, is apparently losing money.

Yandex said that “there are no negotiations over selling these businesses or parts of them,” but that “as a growing, developing business in the Israeli market, we are discussing professional cooperation with various Israeli companies.”

In March, the media reported that Yandex had shut down Yango Deli in Paris and was considering doing the same in London. At the time, Yandex Israel said the company was continuing with its plans to expand and was providing services to more than a million Israelis.

As long as Yandex itself was in good shape, it was willing to subsidize loss-making operations to gain market share. There was also synergy to be gained by combining the various operations – for instance, using Wind scooters to make Yango Deli’s deliveries. However, the company’s current financial situation is forcing it to cut its losses.

Yandex is registered in Holland, but its headquarters are in Moscow and its shares are traded both on Wall Street and in Moscow. Yandex is not under Western sanctions, but investors, customers and partners began shunning it after the war broke out. Its shares lost 60 percent of its value over the course of three days in late February, and trade in the stock remains suspended on Wall Street to this day.

The company was founded by Arkady Volozh, one of Russia’s wealthiest businessmen. Volozh, who is Jewish and lives in Israel, resigned from both his job as the company’s CEO and his seat on the board of directors a month and a half ago, after Western countries sanctioned him personally. His replacement is Daniil Shuleyko, who previously ran the company’s global taxi business.

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