Naspers's Prosus eyes US$5bn share buyback plan
Naspers’s Internet division Prosus today announced it is planning to acquire up to $5 billion in total of Naspers and Prosus shares.
In a statement, the European-listed Prosus says this is a further step to crystalise value for shareholders.
The announcement follows earlier actions such as the unbundling of MultiChoice Group and the listing of Prosus on Euronext Amsterdam last year.
The purchase of Naspers and Prosus shares also represents a meaningful investment in the group’s strong Internet portfolio, says Prosus, adding that it is regarded as a good use of capital, given full market valuations evident in consumer Internet mergers and acquisitions (M&A) and the group’s sizeable consolidated discount to net-asset-value (NAV).
“We have found several large M&A opportunities in our sector to be fully priced and have stayed disciplined,” says Bob van Dijk, chief executive officer of Prosus and Naspers.
“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.”
Basil Sgourdos, chief financial officer of Prosus and Naspers, comments: “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.
“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 US$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.
These purchases will be funded from cash resources. Prosus intends not to vote the Naspers shares acquired. It is expected that the Naspers shares acquired will be held in treasury and will thus be excluded from Naspers per share financial metrics.