Naspers to Invest in Acquisitions Rather Than Return Cash With Buybacks
Naspers Ltd. (NPN), South Africa’s largest media company, has no plans to return cash to shareholders through stock buybacks, preferring to invest in acquisitions, Finance Director Steve Pacak said.
Naspers has “lots of opportunities” and the challenge is to find the right ones, Pacak told investors at the annual shareholders’ meeting in Cape Town, where the company is based.
“The acquisitions we have made have provided us with a good return on capital,” Pacak said in answer to a question from an investor. “It is better for shareholders in the long run to invest the cash as opposed to buying back shares.”
Naspers, which has operations in 131 countries including China and Brazil, held cash and equivalents of 8.73 billion rand ($1.2 billion) at the end of its fiscal year on March 31. The company aims to grow at existing businesses, though it was in talks with about 30 companies on potential acquisitions, Chief Executive Koos Bekker said on June 27.
Naspers rose as much as 2.4 percent to 337.50 rand and was up 1.4 percent as of 3:27 p.m. in Johannesburg trading. That pared the stock’s decline this year to 14 percent.
The company owns newspapers, pay-television channels such as MultiChoice, Africa’s largest, and Internet service providers including Tencent Ltd., China’s biggest.
The South African company acquired a 28.7 percent stake in Russian Internet operator Digital Sky Technologies Ltd. last year in a deal that included contributing its 39.3 percent in another Russian online company, Mail.ru, and investing $388 million in cash. In Latin America, Naspers bought 68 percent of classifieds business OLX.com for $144 million in August.
Valuations make finding good buying opportunities difficult among Internet companies, Chairman Ton Vosloo said at the meeting. Naspers will also focus on expanding current businesses and developing new technologies, he said.
“This may dampen earnings in the year ahead, as the cost of developing these businesses is expensed through the income statement,” Vosloo said. “However, we believe this strategy will stimulate long-term growth prospects.”
The global economy is “difficult to read” and slowing global growth wouldn’t encourage consumers and advertisers to spend money, Vosloo said. Naspers’s geographic diversity will help mitigate any risks, he said.
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