Prosus NV plans to buy back a combined $5 billion of shares in the global e-commerce giant and its South African parent Naspers Ltd., a move designed to narrow a valuation discount between the company and its stake in Tencent Holdings Ltd.
The purchase will start following the release of half-year earnings on Nov. 23, Amsterdam-based Prosus said in a statement on Friday. The group will aim to pick up $1.37 billion of its own stock and $3.63 billion of Naspers.
“The proposed transaction is a timely investment in the group’s strong internet portfolio, which is a sensible use of capital given full market valuations in consumer internet M&A,” Prosus said.
The move marks the latest in a series of efforts by Naspers and Prosus to achieve a market valuation greater than the sum of its parts.
The Cape Town-based parent was an early-stage investor in China’s Tencent, and still holds a 31% stake, but has long been overshadowed by the soaring stock price of its prized asset. Naspers spun off most of its internet assets into Prosus just over a year ago in part to resolve the problem, but the move has made little difference.