Naspers spin-off Prosus announces $5-billion share buyback plan

Naspers’s European-listed Internet investment holding company Prosus announced on Friday that it plans to acquire up to US$5-billion (R82-billion) in both Naspers and Prosus shares in a massive share buyback programme.

The move, Prosus said in a statement, is designed to “crystallise” value for shareholders and comes as both companies continue to trade at a discount to their investment in Chinese affiliate Tencent Holdings. It’s likely to light a fire under both the Prosus and Naspers shares on Friday when trading opens in Amsterdam and Johannesburg.

“It follows earlier actions such as the unbundling of MultiChoice Group and the listing of Prosus on Euronext Amsterdam last year,” Prosus said in the statement.

“The purchase of Naspers and Prosus shares also represents a meaningful investment in the group’s strong Internet portfolio. It is regarded as a good use of capital, given full market valuations evident in consumer Internet M&A and the group’s sizeable consolidated discount to net-asset-value (NAV).”

In January, Prosus lost a protracted bidding war for UK food-delivery service Just Eat to Takeaway.com. Prosus publicly raised its bid twice before Takeaway announced its final offer in December, valued at about £9.16/share at the time, Bloomberg News reported.

Bob van Dijk, the chief executive of both Naspers and Prosus, said that it has found several large acquisition opportunities to be “fully priced” and has “stayed disciplined” in not pursuing them.

‘Sensible use of capital’

“Utilising cash to own more of our current portfolio through a purchase of our own shares — when the discount to NAV is sizeable — is a sensible use of capital,” Van Dijk said.

“Over the years, our group has achieved improved financial flexibility. It has built a portfolio of e-commerce assets with significant cash flow-generating capabilities. The group is now in a position to both invest in its asset portfolio, and to purchase its own stock when it makes sense from a returns perspective,” added Prosus and Naspers chief financial officer Basil Sgourdos.

“Management and the Naspers and Prosus boards are committed to delivering long-term returns for shareholders. We will also continue working on a series of initiatives to further address the consolidated discount to net asset value.”

In total, up to $5-billion in shares in Naspers and Prosus will be purchased on the open market on a pro rata (72.5%/27.5%) basis in line with the economic stakes of both companies in the Prosus/Naspers asset base.

The purchases will be funded from cash resources. Prosus intends not to vote the Naspers shares acquired. It is expected that the Naspers shares bought will be held in treasury and will therefore be excluded from Naspers per-share financial metrics.

Prosus intends to launch the purchase following the release of its results for the six months ended 30 September 2020, which are expected on 23 November. “The purchases and programmes will be implemented opportunistically and in such a manner as can be comfortably executed in the market.”  — (c) 2020 NewsCentral Media