CAPE TOWN — Naspers Ltd., Africa’s largest media company, agreed to buy Internet auctioneer Tradus Plc for 946 million pounds ($1.91 billion) to tap growth in eastern Europe.
Naspers, based in Cape Town, will pay 18 pounds for each share in London-based Tradus, 11 per cent more than the closing price on Monday, according to a statement to Johannesburg’s Stock Exchange News Service yesterday. Naspers fell as much as 7.2 per cent in Johannesburg trading.
“The drop is probably a function of the size of the acquisition,” Rajay Ambekar, an analyst at Cadiz African Harvest Asset Management, which manages more than $7.3 billion, said by phone from Cape Town. The deal will use up all the company’s cash and the market is probably still a bit “cautious about paying these sorts of multiples for Internet companies,” he said.
Tradus, formerly QXL Ricardo Plc, operates in 11 European countries including Poland, Hungary and Slovakia, according to its Web site. Naspers has been expanding in countries including Poland and Russia to make up for slower growth at home, where rising interest rates are crimping advertising revenue. South African consumer spending growth will slow further, weighing on advertising and circulation sales, Naspers said November 27.
Naspers fell 9 rand to 172 rand at 10:33am in Johannesburg. Before yesterday, the stock had gained 9 per cent this year, trailing the FTSE/JSE Africa All Share Index’s 15 per cent climb. Tradus surged as much as 9.4 per cent to 1,772 pence in London.
Bubble survivor: Tradus has surged this year, more than doubling in London Stock Exchange trading, on speculation the company would be acquired. The stock rose the most in almost 10 months on November 7 after Tradus said it had been approached about a takeover. On November 8, the London-based Times newspaper reported EBay Inc., the world’s largest online auctioneer, might be the bidder.
“The Tradus transaction platform will allow the group to diversify its Internet revenue streams to include transaction income,” Naspers said in the statement yesterday. Shareholders with 17.9 per cent of Tradus’ stock back the offer, Naspers said.
Tradus, a survivor of the bubble in computer-related stocks that peaked in March 2000, was also the subject of a 2005 takeover battle between two groups of investors, one of which included QXL managers. Neither bid won enough investor support to gain approval.
Tradus expansion: Tradus drew renewed bid interest as sales jumped, helped by the return of its Polish unit to the company’s control after a legal battle and expansion in eastern Europe. Tradus has introduced Bulgarian and Romanian Web sites this year and purchased a stake in a Russian company. The majority of Tradus’s 400 employees work in Poznan, Poland, where the company’s biggest business is based, according to the company Web site.
QXL first sold shares to investors for 195 pence each in October 1999, and the stock peaked in March 2000 at 2,232.5 pence, valuing the auctioneer at more than 2.5 billion pounds. The stock subsequently lost more than 99 per cent of its value.
Naspers offered in October to buy Gadu-Gadu SA, the biggest Polish provider of Internet chat and call services, for 413.2 million zloty ($164.1 million). The South African company also bought 33 per cent of Mail.ru, a Russian Web portal, for $191 million this year.
“It’s a hefty transaction, but traditionally Naspers has been quite forward-thinking,” Craig Pheiffer, general manager of investments at Johannesburg-based Absa Asset Management Private Clients, said by phone of the Tradus transaction yesterday. “All of their acquisitions have always had a longer-term profile.”
Naspers’s profit rose 76 per cent to 1.45 billion rand ($210 million) in the fiscal first half through September 30, helped by acquisitions.
Profit at Tradus more than tripled to 4.75 million pounds in the fiscal first half ended September 30.