14 DAY TRIAL // Naspers, a South African media company, has announced that it will acquire a 28.7 percent stake in Digital Sky Technologies (DST), the Russian internet company which has invested in Facebook and Zynga and recently acquired the ICQ instant messaging service.
The two companies were already connected, both owning stakes in Mail.ru, Russia’s largest internet portal. Naspers will invest $388 million in cash in the Russian company and will also give up its 39.3 percent stake in Mail.ru, which it acquired from DST for $165 million in 2007.
Naspers made the deal through one of its subsidiaries Myriad International Holdings (MIH). Naspers will transfer its stake in Mail.ru to DST which will now own 99.9 percent of the internet portal which offers email, social gaming and other related services and is the leading website of its type in Russia and other Russian-speaking countries. After the transactions, Naspers will own almost 30 percent of DST.
However, Naspers is also a share holder in Tencent, the Chinese internet giant which operates the QQ instant messaging service, the largest such service in China and one of the largest in the world with over 500 million users. An early investor in Tencent, Naspers now owns a 35 percent stake. This is relevant because Tencent has invested in DST as well, earlier this year, buying a 10 percent stake for $300 million.
The three companies operate rather closely, even though they focus on different markets and have wildly different histories. Tencent, founded in 1998, is very powerful in China and is rated as the world’s third largest internet company, based on market capitalization. However, it has made very few moves outside of its home country.
Naspers is focused on Africa and is a traditional media company, having been founded in 1915. It makes most of its money from pay TV and print but it has invested heavily in internet companies, in Africa and other emerging markets especially Brazil.
DST is the most aggressive of the bunch, having made waves last year when it invested in Facebook valuating the social network at $10 billion. Since then it has continued to acquire shares in Facebook especially from former employees and is said to own as much as 10 percent of the social network having invested about $800 million for that. It has also made other strategic investments, the most well known being Zynga.