Prosus Scraps $4.7 Billion Acquisition of BillDesk
In a surprising move, Amsterdam-listed Prosus has terminated its $4.7 billion acquisition deal with BillDesk, a leading payment processing company in India. The decision comes just a month after the proposed acquisition received approval from the local antitrust watchdog.
Deal Fails to Meet Certain Conditions
According to a statement released by Prosus on Monday, certain conditions precedent were not fulfilled by the 30 September 2022 long stop date. As a result, the agreement has terminated automatically in accordance with its terms, and the proposed transaction will not be implemented.
The all-cash acquisition was announced at the peak of the bull cycle last year and was expected to be one of the largest M&A deals in the South Asian market’s consumer internet space. The deal would have allowed Prosus to dominate the market of payments processing in India, with BillDesk powering payments for most Indian government departments.
Prosus Loses More Than Half of Its Market Cap Since Early Last Year
Prosus, the investment arm of Naspers, has lost more than half of its market cap since early last year. The company has been selling stakes in various firms, including Tencent and JD.com, in recent months.
The deal would have allowed Prosus to expand its presence in India’s payments market, which has shown cracks in recent quarters. However, it appears that the company no longer wishes to honor the arrangement.
PayU-BillDesk Deal Would Have Been a Record-Setting Cash Transaction
The $4.7 billion acquisition of BillDesk would have been one of the largest cash deals in India’s internet space. The deal would have also meant a $1.4 billion payday for founders and over $3 billion for investors.
Prosus Remains Committed to Indian Market
Despite the termination of the deal, Prosus remains committed to the Indian market and growing its existing business within the region. The company has stated that it will continue to focus on expanding its presence in India’s payments market through other means.
BillDesk Founders Set to Lose Out
The founders of BillDesk, who were set to make $500 million each from the acquisition deal, are now facing a significant loss. The company was valued at $1.59 billion after its January 2019 funding round and had raised $245 million to date.
Prior to doing the deal with Prosus, BillDesk was internally planning to file for an initial public offering (IPO). If combined, PayU and BillDesk would have commanded over 40% of the Indian market, more than their closest rival Razorpay.
Industry Reacts to Termination
Several fintech founders were shocked by the development, wondering what aspect broke the deal. Prosus’s decision has left investors and industry experts alike trying to make sense of the situation.
Timeline of Events
- September 2022: The proposed acquisition deal between Prosus and BillDesk receives approval from the local antitrust watchdog.
- October 2022: Certain conditions precedent are not fulfilled by the 30 September 2022 long stop date, leading to the termination of the agreement.
- Present day: Prosus has terminated its $4.7 billion acquisition deal with BillDesk, citing unfulfilled conditions.
Conclusion
The termination of the PayU-BillDesk deal marks a significant development in India’s payments market. While Prosus remains committed to the Indian market, the decision has left investors and industry experts trying to understand the circumstances surrounding the termination.
As the situation unfolds, it will be interesting to see how the company addresses its plans for expansion in India’s payments market.
