Naspers, Prosus say bye-bye to CEO Bob van Dijk

One always questions what’s happened when a company announces that its chief executive will leave by “mutual” agreement.  More questions are raised when the CEO is immediately relieved of his duties, as is the case for Naspers and Prosus CEO Bob van Dijk.

“The Naspers and Prosus boards and Bob van Dijk have mutually agreed that Bob will, effective 18 September 2023, step down from his position as chief executive, as well as his position on the boards of both companies,” the group said in an announcement early on Monday morning.

“Bob has agreed to assist with the transition after this date and will remain as a consultant to the group until 30 September 2024,” the statement detailed.

Ervin Tu, group chief investment officer, has been appointed as the interim CEO.

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Bob van Dijk: Naspers and Prosus journey

Van Dijk has been CEO of Naspers since 2014, following the sudden death of Antonie Roux, who was expected to fill the position. Van Dijk served as CEO of Prosus since its listing in 2019.

The Naspers announcement credited Van Dijk as the person who “established the group as a leading global consumer internet company ” creating significant value for shareholders.

“The boards of Prosus and Naspers want to thank Bob for his leadership over a full decade,” said Koos Bekker, chairman of the group.

“During this time, substantial businesses were established in Classifieds, Food Delivery and Payments, while we also entered several new fields. We appreciate Bob’s contributions and wish him much success with his future career,” said Bekker.

New broom: Ervin Tu appointed interim Naspers and Prosus CEO

The announcement states that the group’s strategic goals remain unchanged, and it is on target to deliver on its commitments, which include achieving consolidated ecommerce trading profit during the first half of the current 2025 financial and continuing the open-ended share repurchase programme.

Naspers says that Tu, as the chief investment officer, has made significant contributions to the company’s strategic direction and will provide continuity in the execution of the group’s key priorities.

“That includes bringing the company’s consolidated ecommerce portfolio to profitability while maintaining growth and leading capital allocation across the group,” according to a press release issued soon after the formal announcement was published on Sens.

Naspers included a statement from Tu: “Prosus is operating with momentum. I am honoured to assume the role and help shape the group’s future. I couldn’t be more excited about the team around me and to get started.”

It will be interesting to see if Tu will get the top job permanently and what might change.

Inherited issues of shareholding structure

Over the years, Van Dijk was regularly challenged to unlock the billions of rand in hidden value in Naspers. Shareholders who looked on helplessly as the company traded at a discount of as much as 50% to its net asset value, predominantly due to its stake in the Chinese tech giant Tencent.

The listing of Prosus and the complicated cross-holding between Naspers and Prosus did little to reduce the discount between Naspers and Tencent. Some believe that the scheme actually added to it.

At the end of July, the announcement that the group would simplify this structure was seen as a realisation by management that the difficult-to-understand shareholding structure was a mistake.

However, Van Dijk was in a difficult position from his first day in office. He inherited many problems and was, perhaps, not afforded enough leeway to take decisive action.

The Naspers control structure of unlisted A-shares with 1 000 votes per share compared to the listed N-shares with one vote each secures control by a minority of shareholders, Keeromstraat 30 Beleggings and Naspers Beleggings.

In effect, Naspers is controlled by less than 6 000 shareholders. This extends to Prosus too.

Van Dijk also inherited most of the group’s struggling ecommerce and food delivery interests.

That these new businesses absorbed all the profit from a growing Tencent soon became the outstanding feature of Naspers’s results, and Van Dijk and his team were accused of destroying value rather than adding it with these endeavours.

Absence of solid profitability

What made the situation even worse is that Naspers’s reported profits comprised mostly equity accounted income (Tencent) and the revaluation of the Tencent stake, but not much cash. The stuff Naspers could use to fund its worldwide expansion plans was more minor – mainly limited to the dividends received from Tencent.

While Naspers and Prosus always remind people that billions of customers use the products and services of companies the group has invested in, the absence of solid profitability suggests that shareholders should expect significant changes.

This article is republished from Moneyweb under a Creative Commons licence. Read the original article.