South African media holding Naspers invested $388 million in Digital Sky Technologies on Wednesday in a stake swap that gave DST full control of the popular Mail.ru service.
Naspers subsidiary Myriad International Holdings will receive a 28.7 percent stake in DST in exchange for Naspers' 39.3 percent stake in Mail.ru and a $388 million cash infusion.
In addition, minority stakes in Mail.ru will be converted into DST shares, leading to DST gaining control of 99 percent of Mail.ru, the companies said in a statement.
DST is controlled by Yury Milner and Grigory Finger, while billionaire Alisher Usmanov owns an additional blocking stake.
The deal values DST at $2.5 billion, down from an estimated $2.9 billion valuation implied in April, when DST sold a 10.26 percent stake to China's leading Internet and telecoms firm Tencent for $300 million, VTB media analyst Anastasia Obukhova said in a note.
Naspers already holds a 35 percent stake in Tencent.
The deal marks the next stage of an ever-closer integration among the three global Internet holdings with an eye for emerging markets.
The three companies have been tipped for purchasing the same assets over the past several years, as both Naspers' and Tencent's QQ messaging services have considered purchasing ICQ. ICQ was finally purchased by DST, with the $185 million deal closing on Tuesday.
With the fresh cash on hand, DST is likely to seek new purchases outside Russia, where the company already has "everything they need," said Leonid Delitsyn, an analyst with Finam. Such purchases are likely to be in line with the strategies of Tencent and Naspers as well.
DST's Russian assets include social networks Odnoklassniki and Vkontakte, as well as the HeadHunter employment web site. The Russian holding made global headlines last year when it acquired a 10 percent stake in U.S. social networking site Facebook for $200 million.
In May, the company announced plans to invest $1 billion into Internet firms in Asia, Australia, and the U.K.
Wednesday's deal may be a move toward simplifying DST's ownership structure ahead of a possible IPO for DST, Delitsyn said.
RBC Daily on Wednesday cited sources as saying DST may float 25 percent of its shares on either the New York Stock Exchange or the NASDAQ as early as this fall.
DST spokesman Leonid Solovyov confirmed that the company is considering an IPO, but he did not provide further details.
A Message from The Moscow Times:
Dear readers,
We are facing unprecedented challenges. Russia's Prosecutor General's Office has designated The Moscow Times as an "undesirable" organization, criminalizing our work and putting our staff at risk of prosecution. This follows our earlier unjust labeling as a "foreign agent."
These actions are direct attempts to silence independent journalism in Russia. The authorities claim our work "discredits the decisions of the Russian leadership." We see things differently: we strive to provide accurate, unbiased reporting on Russia.
We, the journalists of The Moscow Times, refuse to be silenced. But to continue our work, we need your help.
Your support, no matter how small, makes a world of difference. If you can, please support us monthly starting from just $2. It's quick to set up, and every contribution makes a significant impact.
By supporting The Moscow Times, you're defending open, independent journalism in the face of repression. Thank you for standing with us.
Remind me later.