Naspers Focuses on Classifieds After $1.1 Billion Avito Deal
(Bloomberg) -- Naspers Ltd. will focus on streamlining technologies and harnessing artificial intelligence across its e-commerce and classifieds businesses after taking full control of Russia's Avito BB in a $1.1 billion deal.
Africa's biggest company by market value on Friday bought out minority shareholders in Avito through its OLX Group, increasing exposure to Russia's e-commerce market and strengthening its global reach in the sector.
Naspers plans to consolidate different local online technologies into a single platform, Martin Scheepbouwer, head of classifieds, said by phone on Saturday. “We want to share technology, artificial intelligence and data efforts to have solutions work across the business globally,” he said.
Online Transformation
Naspers has transformed itself from a newspaper publisher into a $98 billion media empire by pushing into e-commerce, adding to its stakes in Russian internet group Mail.Ru Group Ltd. and Chinese social network firm Tencent Holdings Ltd. In the past nine months, it spent more than $700 million on acquisitions and investment in the classifieds sector.
“Exchanging technology, exchanging people was quite difficult until this deal,” Scheepbouwer said. “Potentially we could take Avito to other countries, but the key focus is to integrate technology and leverage scale of our classifieds business under the OLX umbrella.”
Taken together, Naspers's classifieds business is now profitable, he said. The division is worth as much as $10 billion, excluding the latest Russian deal, according to a report by Barclays Plc.
The deal is another step to reduce an almost $28 billion gap between Naspers's market value and that of the 31 percent stake it holds in Tencent. Naspers last week said it will list pay-TV unit MultiChoice on the Johannesburg stock exchange on Feb. 27, spinning off a business it developed over decades.
“Spending $1.2 billion on the last 29 percent of Russian classifieds business Avito probably won't change the market's view on Naspers,” Bloomberg Intelligence analyst John Davies said in a note on Friday. “It doesn't address the key uncertainty implied by its trading at a discount to the value of its Tencent holding.”
Naspers shares fell 0.3 percent in Johannesburg at 9:35 a.m.
Separately listing Avito isn't an option for the time being, Scheepbouwer said. “Strategically Avito is very well integrated and a stand-alone IPO looks fairly unattractive.”
--With assistance from Ilya Khrennikov.
To contact the reporter on this story: Loni Prinsloo in Johannesburg at lprinsloo3@bloomberg.net
To contact the editors responsible for this story: Rebecca Penty at rpenty@bloomberg.net, Hilton Shone, Kim Robert McLaughlin
©2019 Bloomberg L.P.
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