Prosus's share price is being driven by the recent strength in Tencent shares and as the company failed to win a bidding war to acquire Just Eat. Photo: Aly Song/Reuters
Prosus's share price is being driven by the recent strength in Tencent shares and as the company failed to win a bidding war to acquire Just Eat. Photo: Aly Song/Reuters

WATCH: Tencent props up Prosus gains after it failed to acquire Just Eat

By Sandile Mchunu Time of article published Jan 14, 2020

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DURBAN – Prosus's share price is being driven by the recent strength in Tencent shares and as the company failed to win a bidding war to acquire UK-listed company Just Eat.

Prosus’s shares gained 0.91 percent on the JSE on Monday to close at R1136.50.

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Video by: Chelsea Lotz, Business Report Plus, BR+

Mergence Investment Managers’ head of equities, Peter Takaendesa, said the key driver for the recent strength in the Prosus share price is the strong recovery in the Tencent share price, as market views on China have improved post indications that phase one of the trade deal with the US is ready for signing.

“It is also possible that investors are encouraged that Prosus has avoided the temptation to win at all cost in the bid war for Just Eat,” Takaendesa said.

Naspers owns a 31 percent stake in China’s Tencent, which is housed under Prosus.

Tencent's share price has gained more than 6 percent since last Thursday on the Hong Kong Stock Exchange.

Prosus, an international internet assets division of Naspers, last week was scorned by Just Eat shareholders by rejecting its 800 pence (R149.90) a share offer in favour of rival Takeaway.com to create a new company to be called Just Eat Takeaway.com.

Prosus had initially tried to convince the Just Eat board that its offer was better than that of Dutch company Takeaway, but its three bids were rejected by the Just Eat board.

Prosus’s first attempt of a 710p cash bid in October was rejected, and its two revised bids in December of 740p and 800p were also rejected by the Just Eat’s board.

After the failed bid, Prosus chief executive Bob van Dijk said Just Eat was not an acquisition they wanted to make at any cost and while they had significant financial capacity, they believed that their final offer of 800p a share was appropriate in light of the investment required and preserved their ability to create value for their shareholders.

Prosus has investments in delivery services around the globe which includes Germany-based Delivery Hero.

Takaendesa said there is still significant room for growth in its existing food delivery footprint, but this required heavy investment in the next three to five years.

“There is also room for Prosus to increase its shareholdings in a number of companies it is currently invested in, and one cannot rule out further merger and acquisition activity in the coming few years as the industry continues to grow,” Takaendesa said.

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