Naspers’s Prosus on hunt for deals with $4.3-billion to hand

Prosus is on the lookout for acquisitions after the Dutch e-commerce giant reported a 28% rise in first-half earnings and a net cash position of US$4.3-billion.

The owner of global Internet assets specialising in the likes of food delivery, payments and online education lost out on two high-profile takeover battles in the past year and maintains a strong cash position, according to a statement on Monday.

“We continue to explore growth opportunities to advance our strategy, expand our ecosystem and position the business for sustainable growth,” Prosus said. The company started a $2-billion debt sale in July that drew strong investor demand.

Prosus’s focus on e-commerce has proven effective during the Covid-19 pandemic, which drove demand for Internet services around the world. However some sectors, such as online travel, were hit by a slump in demand for holidays. While the longer term economic impact of the crisis is unclear, Prosus is “cautiously optimistic” about its prospects, the company said.

Deals to have eluded Prosus include a battle for Just East, which was eventually bought by Takeaway.com, while eBay’s classifieds business was aquired by Prosus’s smaller Norwegian rival, Adevinta, for $9.2-billion.

Persistent gap

Among challenges facing Prosus CEO Bob van Dijk is a persistent gap in the company’s valuation and its crown jewel: a 31% stake in Chinese giant Tencent. The Amsterdam-listed company’s stock has gained 37% this year to give a market cap of €148-billion, but the Tencent shareholding is worth about €191-billion.

This was also a problem for Naspers, the South African company that spun off Prosus in 2019 in part to try and reduce the discount. Prosus said last month it would buy back a combined $5-billion of shares in itself and Naspers in a move designed to boost shareholder value and try to narrow the gap, and will kick off the process Tuesday.

Naspers also reported first-half financials on Monday, and said earnings fell due to its now 73% shareholding in Prosus.  — (c) 2020 Bloomberg LP