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Naspers bags all of Takealot

Billions invested to date finally give it (effective) outright ownership.

Naspers has acquired Tiger Global Management’s stake in South Africa’s largest e-commerce retailer Takealot, and now owns an effective 96% (91% fully diluted) of the business. This was revealed in its provisional results for FY2018, published on Friday. Management retains ownership of the remainder of the retailer, and founder Kim Reid remains as CEO. To date, Naspers has invested more than R4.5 billion in Takealot.

The transaction, completed in December 2017, saw Naspers acquire “an additional 38% interest in Takealot from non-controlling shareholders”. Naspers settled the deal in ordinary (N) shares, which it says it purchased on the open market. At the time, the shares were worth $128 million. Using the average exchange rate for December, the transaction was worth approximately R1.685 billion. Naspers shares are currently trading at a lower level than they were at the end of last year.

The December transaction followed the deal in August where Naspers invested $74 million (then worth approximately R1 billion) for a controlling stake in Takealot. Following this investment, it held an effective 58% interest in the business. The deal was announced in April. It says the total purchase consideration at the time (which represented the “fair value” of its interest in Takealot) was $123 million.

In February 2015, Naspers merged its Kalahari unit – once the market leader – with Takealot. Following the merger, Naspers and Tiger Global each held around 46% of the business (42% fully diluted). This wasn’t a merger of equals, however. Naspers contributed Kalahari as well as 612,977 Naspers shares, valuing the transaction at R1.2 billion. In 2014, when it was announced, Oliver Rippel, then the senior executive responsible for Kalahari, said the two entities had to “to work together if we are to survive and prosper”. He pointed to “many years of losses on Kalahari and four years on Takealot” as a reason for the deal.

Following the merger, Naspers invested a further $54 million (then R700 million) in Takealot during August 2015 as “part of a funding round”.

Takelot is the clear leader in the local e-commerce market, with an estimated share in the mid-teens.

In the year to end-March, Naspers says Takealot grew gross merchandise value – GMV, or everything sold through the site – by 70%, in dollar terms. In rands, GMV grew by 57% in FY18, from growth of 34% in FY17. The business is still loss-making on an Ebitda basis (Ebitda of -16.9% of GMV in FY18, an improvement on the -24.8% in FY17).

Despite technical issues resulting in downtime on Black Friday last year, the retailer reported GMV of R87 million on the day.

Naspers says Takealot has expanded “its reach outside its core categories through Superbalist, its fashion and homeware business, and Mr D Food, South Africa’s leading food-delivery service”. Expanding its presence in food delivery is one of Naspers’s core strategies, and it currently holds a leadership position in 40 markets worldwide.

Naspers-owned units Media24 and Takealot announced last week that they would merge online fashion retailers Spree and Superbalist, effective July 1. Media24 will hold 51% of the merged entity, with Takealot owning 49%. Takealot will run the combined business, as it currently does with Superbalist. (Read: Why did Naspers’s Spree, Superbalist merge?)

In 2014, Takealot raised an investment of more than $100 million from Tiger Global Management. The New York-based hedge fund initially invested in the business at its inception in 2010, when it bought Take2.

Last year, Tiger Global sold its majority stake in Private Property to a consortium led by Caxton.

* Hilton Tarrant works at YFM. He can still be contacted at hilton@moneyweb.co.za.

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Naspers doesn’t know how run a profitable business outside of it being a monopoly

FACT

Spark plug…disagree…who runs all there businesses?

Don’t loose your spark!

So that takes care of the online retail space especially with both Google and Tencent owning shares in JD.com to rival Amazon.
The fact that Amazon are now also investing in retail shops with their Walmart alliance poses an interesting question….will Nasper buy Peokor to compete?
Never a dull moment!

LOL, don’t give the guys over at Steinhoff any ideas, they’re desperate enough for cash!

Naspers is like that kid who wants to own everything – if you stand on their way, they will bully you until you give in

Sorry, previous comment should be PEPKOR – finger trouble!

R4.5 billion for a business that’s never made a profit..

And probably never will. They stink at customer service.

it is contentious but see Amazon’s history, almost an exact copy-paste of the the Amazon model;

use all profits for expansion -> scale up as fast as possible -> offer the widest variety of goods & efficient delivery -> customers go to the place with the widest variety and best delivery ..winner takes all.

if Naspers capture the Sub Saharan African market then they can sell their business to Amazon or JD.com in the future. Amazon and JD find it easier to acquire regional business than compete …*if* the regional business has a very dominant position.

For such a tiny market as South Africa I wonder what Naspers are paying per customer acquired.. At R4.5 Billion I doubt it’s worth it.

@davestew valid concern and unfortunately only time will tell if management will deliver. so far there’s been little evidence, beyond tencent.

One KEY difference is Amazon made losses but generated big operating cashflow, which meant Amazon built itself without perpetually draining shareholders and/or lenders for more and more and more capital. Go have a look at Amazon Return on invested capital… by 2016 Amazon had made two billion profits but was dumping seventeen billion cashflow from operations

Mention of the Kalahari-Takelot merger brings back memories. My takeaway from the Kalahari-Takealot merger was that I lost a carefully nurtured wishlist on Kalahari. There was no warning this would happen and that Kalahari customers should take a manual copy of their wishlists. Whatever the e-commerce core strategy, focus should always be on customer service 24/7/365.

For some unexplained reason I don’t feel as happy buying from Naspers as from Takealot.

For the ones that keep knocking Naspers and can’t/don’t want to see the woods for the trees, and their leadership, remember:
‘’Leadership, like swimming, cannot be learned by reading about it’’ Henry Mintzberg (1939_)
Henry Mintberg’s 5 P’s of Strategy. 1. Plan 2. Ploy 3. Pattern 4. Position 5. Perspective
Well, from ZAR 13, 64 in 2002, to where we are today, ZAR 3208, 27 in 2018, it must rate as one of the best investments that can be made/ was made on the JSE.
Naspers is slowly but surely busy diversifying and most definitely ‘’the’’ market leader! They are also at a well advanced stage with digital transformation and the new challenges, all over Africa Continent, and elsewhere.
Just keep buying Naspers, they will make you famous!

Ask me, I know too, but I know what you don’t know. I know the real risks that Naspers faces and also the conceit and arrogance of its board – (https://www.biznews.com/global-investing/2018/04/12/naspers-president-xi-china-sean-peche/ – this may or may not change your mind but if it wont then this might just – http://www.mafiabuzz.co.za/downloads/CawB/2017%20Buzzes/PwB%20Buzz%20086.doc

if you read this you may get a different perspective on just how screwed Naspers’minorities are.

buy NPN @ R2450….and why is the price for SA ebooks more on Takelot than Amazon?

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