Prosus owns a 30.9% stake in Asia's online software and payments giant Tencent worth nearly 200 billion euros at Thursday's closing price. Prosus's own value was just 135 billion euros as of Thursday's close, including other investments in online classified, payment and food delivery businesses.
Prosus said it would buy-back up to $1.37 billion of its own stock and up to $3.63 billion of Naspers' shares on the open market in a proposed transaction it expected to launch following the release of its interim results on Nov. 23.
Naspers shares rose 3.4% to 10.45 rand at the start of trade on Friday, while Prosus shares gained 1.4% to 84.38 euros in Amsterdam, and were up 27% so far this year.
Prosus CEO Bob van Dijk said the company had looked at other options, including spending money on new large acquisitions but found buying back its own shares a better deal, pointing to the discount.
"Utilising cash to own more of our current portfolio through a purchase of our own shares - when the discount to NAV (net asset value) is sizeable - is a sensible use of capital," he said in a statement. Naspers has long been trying to narrow the discount between its stock price and that of its underlying assets, and it listed Prosus separately in Amsterdam as part of those efforts last year. It retains a 72.6% stake in Prosus.
(Reporting by Emma Rumney and Toby Sterling; Editing by Tim Cocks and Tomasz Janowski)
