Shareholders become competitors! Tencent's major shareholder Naspers considers reducing its stake in Meituan, fully supporting its star asset iFood

After entering Hong Kong and the Middle East, Meituan plans to further expand into the South American market. However, this move increases the risk of Tencent's major shareholder Naspers reducing its stake. After Meituan enters Brazil, it will form a direct competitive relationship with iFood, which is under Naspers.

As Meituan plans to invest $1 billion to enter the Brazilian market, its important shareholder, Naspers Group (holding 4% of Meituan's shares, valued at $4 billion), has issued its strongest response to date, preparing to reduce its stake in Meituan and reinvest the funds to "nurture" its "favorite child" in Brazil—delivery giant iFood.

Naspers stated in a conference call on Monday evening:

As a shareholder of Meituan, we are "disappointed" with Meituan's international expansion strategy, believing that the risk of failure has increased and they will face fierce competition.

We may sell some of our Meituan shares to reinvest the funds into businesses that can "strengthen our own ecosystem." The company's top priority is to strengthen its "ecosystem" (with iFood as the core of its Latin American business), and any investment decision must serve this larger goal.

When discussing Meituan's international expansion strategy, Naspers expressed that the probability of Meituan winning in international markets is low:

They have done well in Hong Kong and their first investment in the Middle East, and now they are attempting a second expansion in the Middle East. India is also trying, while they are also attempting in Latin America. We are less confident in today's international expansion strategy than we were in the past.

Meituan's Entry into South America Triggers Strategic Conflict

In May of this year, Meituan announced plans to launch the delivery service platform "Keeta" in Brazil, with plans to invest $1 billion over the next five years to establish and expand its business in the country.

This move puts Meituan in direct opposition to iFood, which is already one of the largest delivery platforms in Latin America. Naspers and Prosus CEO have clearly expressed doubts about Meituan's ability to expand internationally.

The former CEO of iFood stated:

If we decide to increase our investment in certain businesses in Latin America, we could sell some of our Meituan shares, or any portion we deem reasonable, to invest more funds to strengthen our ecosystem.

We will focus on shareholder interests to implement this plan. If we have the opportunity to help Meituan grow faster and better in certain ecosystems, we will seize those opportunities.

This move is likely to release a significant amount of cash for Naspers, with its Meituan shares valued at approximately $4 billion (71.1 billion rand). Naspers acquired these shares in 2022 when Tencent decided to distribute its 17% stake in Meituan to shareholders.

Naspers' Star Asset—Delivery Giant iFood Performs Strongly

For Naspers, iFood has become the most valuable asset in its total valuation of over 3 trillion rand, aside from Tencent.

Naspers fully acquired the business for €1.5 billion in 2022, and the company's order volume is expected to exceed 100 million monthly orders for the first time by the end of 2024, growing to over 120 million orders in March of this year. iFood has already established a dominant position in the Brazilian market As of the fiscal year ending March 2025, iFood has achieved remarkable growth: gross merchandise value increased by 32% year-on-year, order volume grew by 29%, and revenue rose by 30%. More importantly, its core food delivery business saw adjusted EBITDA increase by 71% year-on-year to $306 million, with a profit margin rising to 27%. Overall, iFood's adjusted EBITDA reached $226 million, a staggering increase of 178% year-on-year.

During the conference call, Naspers emphasized that the future growth points for iFood lie in new businesses (fintech, online travel), which serve as iFood's moat and are expected to maintain good profit margins. Additionally, when discussing potential competition, it was mentioned that the company has been well-prepared and has set aside some funds for this competition.