March 12, 2013 / 11:16 AM / 5 years ago

UPDATE 1-S.Africa's Naspers buys 18 pct stake in Russia's Avito

* Naspers acquires 18.6 pct stake in Avito

* Plan to merge classifieds units Slando, OLX into Avito

* Naspers invests $50 mln in Avito

* Avito predicts further market consolidation

By David Dolan and Maria Kiselyova

JOHANNESBURG/MOSCOW, March 12 (Reuters) - South African media and e-commerce firm Naspers Ltd bought an 18.6 percent stake in Russian internet rival Avito Holdings with an agreed merger of their local classified businesses and $50 million in cash.

Naspers said it planned to merge its Slando and OLX Russian units into Avito and has injected $50 million to create a more powerful presence in Europe’s largest internet market.

“The rationale for this transaction was to create a stronger market player in the high-growth Russian classifieds market, in which we’ll have a significant minority stake,” Naspers spokeswoman Meloy Horn said on Tuesday.

The deal values Avito at more than $570 million and will give the group a 25 percent share of the burgeoning Russian classifieds market in terms of traffic and a 15 percent share in revenue terms, according to a report in the Financial Times.

Russia’s internet market is attracting investor interest from around the world. Share sales in internet groups Yandex and Mail.Ru were oversubscribed and online auction giant eBay Inc has highlighted the market’s importance.

Avito, which has more than 30 million monthly unique visitors buying and selling everything from cars to real estate, planned to use the proceeds to gain a bigger share in its key Auto and Real Estate classifieds categories, it said on Tuesday.

Avito co-founder and Chief Executive Jonas Nordlander said Avito aimed to be the most liquid online player in a market where he expected further consolidation.

Cape Town-based Naspers, which has transformed itself into a $29 billion internet powerhouse by buying businesses in fast-growing markets, also has a stake in Russian email-to-social networking group Mail.Ru.

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