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UPDATE 3-Russia's Yandex and TCS terminate $5.48 bln Tinkoff talks

Fri, 16th Oct 2020 11:18

* Potential $5.48 bln cash-and-shares deal off the table

* Tinkoff founder says the bank is not for sale

* Shares in TCS and Yandex fall after announcement
(Adds comments from Yandex deputy CEO)

By Alexander Marrow and Andrey Ostroukh

MOSCOW, Oct 16 (Reuters) - Plans for Russia's biggest
corporate deal of 2020 collapsed on Friday after talks over a
$5.48 billion cash-and-share sale of online bank Tinkoff to
internet giant Yandex ended.

Discussions over the potential tie-up, which would have
increased competition for Russia's largest lender Sberbank
and smaller rivals in technology and banking, stalled
less than four weeks after they were announced by Tinkoff parent
TCS Group Holding.

TCS said in a statement it had agreed with Yandex
not to proceed with the transaction, but Tinkoff would continue
to partner with it on existing and future projects.

"Today I decided to break the possible deal with Yandex,"
TCS founder Oleg Tinkov said in an internal email which was seen
by Reuters on Friday.

Tinkov, a major TCS shareholder, could not be reached for
comment and the online bank's press office declined to comment.

Yandex shares fell 2.2% in Moscow to 4,652.0 roubles
($59.64) at 1451 GMT, while TCS Group's London-listed shares
were 1.3% lower, after earlier hitting a three-month low.

'NOT FOR SALE'

TCS and Yandex announced they were in talks on Sept. 22, a
few months after Yandex said it was ending its partnership with
Sberbank, Russia's largest lender.

Tinkov said in his email that Yandex was interested only in
a takeover of Tinkoff, the world's largest fully online bank
with more than 10 million customers across Russia, whereas
Tinkov viewed the deal as a merger.

Yandex had agreed that Tinkov would be involved in managing
the bank and help Yandex in general after the deal, Tigran
Khudaverdyan, Yandex's deputy CEO, said in a post on his
corporate blog, confirmed as genuine by its press department.

Khudaverdyan said Tinkov had made more demands after each
stage of talks and his decision did not come as a surprise.

Tinkov had previously played down talk of an acquisition,
insisting the deal being discussed with Yandex was not a sale
but a merger.

"Tinkoff is not for sale, neither to Yandex, nor MTS,"
Tinkov said, referring to reports that TCS was in discussions to
sell the bank to Russia's top mobile operator MTS.

And Vladimir Yevtushenkov, head of Sistema, MTS'
major shareholder, told Reuters he not been approached by
Tinkov.

Maria Sukhanova, a TMT analyst at BCS Global Markets, said
further approaches were possible.

"We can't rule out that parties will resume talks in the
future or that another buyer in the TMT universe for all of, or
a stake in, TCS will ultimately emerge," she said.
($1 = 78.0050 roubles)
(Reporting by Andrey Ostroukh, Alexander Marrow, Anastasia
Teterevleva and Tatiana Voronova; additional reporting by Polina
Devitt, Nadezhda Tsydenova and Elena Fabrichnaya;
Editing by David Goodman and Alexander Smith)

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