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 U.S. +1.407.788.2780     Germany +49.89.6.214.6044 info@aimgroup.com

Naspers, Schibsted Media Group, Telenor Group and Singapore Press Holdings (SPH) today agreed to stop competing with their respective classified businesses in Brazil, Indonesia, Thailand and Bangladesh. Instead they will work together “by establishing four joint ventures for the development of their online classified businesses” in the four countries. In a fifth country, Philippines, 701Search will transfer its classifieds business to Naspers.

What exactly that means will be explained in a web call by the top managers of the four companies early on Friday, Nov. 14.

Questions that remain unanswered include: will brands be merged; will brands vanish; will brands continue separately as before; are only stuffs on the horizontal platform ST701.com involved in the deal in Thailand, or also other verticals?

We’ll listen in and report.

The affected classified businesses are OLX and Bomnegocio in Brazil, OLX (previously Tokobagus) and Berniaga in Indonesia, ST701.com and OLX (previously Dealfish) in Thailand and in Bangladesh OLX and Cellbazaar.

The parties declared this truce after burning marketing money no end in the past few years in places like Brazil, where OLX and Bomnegocio battled for market supremacy without anyone managing to pull away decisively from the other (look at the SimilarWeb chart of stationary visits below).  OLXBOM

In other words, this was a solution much in the style of the truce declared last year in the Slando/Avito battle in Russia, which ended with Naspers chipping in Slando and capital for a roughly 18 percent stake in Avito.ru, to end a battle for market dominance in Russia, which cost both sides a packet without giving anyone a clear advantage over the other.

As can be expected, in the media statement the parties focused on the benefits of the agreement to the consumer – and not on the benefits it will bring the four companies. Such as an end to the money-burning on marketing and a quicker swing to positive cash flows.

The share prices of all the parties can be expected to climb tomorrow on the news. Even though the deal still has to be approved by the EU anti-trust authority.

Here is the full media statement released by the parties tonight (Nov. 13):

“The transaction will bring substantial benefits to consumers. Combining the platforms will make it faster and easier than ever for people to trade and turn their items into cash. They will be able to choose from a wider selection of items and be more successful in selling their own items to a larger audience of buyers. By coming together, the businesses will also be able to share cost, expertise and people to more effectively build awareness of the benefits of a vibrant online classifieds offering to consumers.

“The ownership structure of the joint ventures will be:

+ In Brazil Naspers will hold 50 percent and SNT 50 percent (SNT is a 50:50 joint venture between Schibsted and Telenor);

+ In Indonesia Naspers will hold 64 percent and 701Search 36 percent (701Search is a 33:33:33 joint venture between Schibsted, Telenor and SPH);

+ In Thailand 701Search will hold 55.9 percent and Naspers 44.1 percent;

+ In Bangladesh SNT will hold 50.3 percent and Naspers 49.7 percent.

As part of the agreement, 701Search will transfer its online classifieds business in the Philippines to Naspers, who will manage the operation. This will allow 701Search to focus its efforts in Thailand. The parties will continue to develop other markets separately.” (It’s not clear whether this means the parties will be free to run their own sites themselves in Brazil, Indonesia and Bangladesh – but it sounds like that.)

We’ll have more clarity after the web call.

Christo Volschenk