Prosus: Leveraging AI and Acquisitions to Cement Its Position as Europe's Tech Champion

Prosus, the global internet conglomerate, is on a mission to transform itself from a passive investor into a dynamic operator of high-growth tech platforms. With FY2026 revenue targets set at $7.3–7.5 billion and aggressive margin expansion plans, the company's strategy hinges on two pillars: the Just Eat Takeaway.com acquisition and AI-driven operational efficiencies. This shift, coupled with its first positive free cash flow in years, positions Prosus as a compelling play on European tech leadership. But will execution match ambition?

Valuation Potential: Synergies and Scale Drive Growth

Prosus's FY2026 revenue target represents a 17.7% increase from FY2025's $6.2 billion, with adjusted EBITDA expected to nearly double to $1.1–1.2 billion from $655 million. The company aims to triple EBITDA by 2028 through a mix of organic growth and strategic deals. The crown jewel is the €4.1 billion acquisition of Just Eat Takeaway.com, which, if approved by EU regulators by mid-2026, will create a European food delivery powerhouse.

The deal's value lies in operational synergies: Prosus plans to integrate Just Eat's scale with iFood's AI-driven logistics, reducing delivery costs by 20%. This could boost EBIT margins by 10% or more by 2028. The combined entity would dominate markets like the UK, Germany, and Brazil, leveraging AI for route optimization, demand forecasting, and merchant partnerships.

Prosus's shares have lagged broader tech indices amid regulatory uncertainty, but a successful deal close could unlock a 25–30% upside as markets re-rate its earnings potential. Analysts estimate a $100 billion valuation milestone by 2028, assuming synergies materialize.

Execution Risks: Regulatory Hurdles and Operational Challenges

While the Just Eat deal is transformative, risks loom large. The EU's competition scrutiny could delay or dilute the transaction, especially in markets like the Netherlands and Germany, where Just Eat faces antitrust concerns. A worst-case scenario—a forced sale of key assets—could cost Prosus €410 million in penalties.

Even if approved, execution is non-trivial. Integrating Just Eat's fragmented European operations with iFood's AI systems requires seamless tech interoperability and cultural alignment. Prosus's track record in India (Swiggy) and Latin America (iFood) is promising, but European labor laws and brand loyalty could complicate workforce retention and customer acquisition.

Dividend Upside: Tencent's Cash Flow and Free Cash Flow Turnaround

Prosus's 24% stake in Tencent provides a steady dividend stream, expected to rise 24% to $1.2 billion in FY2025. This cash influx, combined with Prosus's own free cash flow turning positive ($36 million in FY2025 vs. -$235 million in 2024), creates a solid foundation for shareholder returns.

The company's buybacks—$50 billion returned since 2020—have boosted NAV per share by 15%. Prosus could reinvest $1.5–2.0 billion annually in growth initiatives, but with disciplined capital allocation, dividends could grow steadily if synergies offset integration costs.

Investment Thesis: Buy the Dip, but Mind the Risks

Prosus is a high-reward, high-risk bet on European tech consolidation. Its AI-first strategy and geographic diversification (Latin America, India, Europe) offer resilience against regional slowdowns. The Just Eat deal's success could make Prosus the Amazon of European food delivery, but regulatory delays or margin misses could crater the stock.

Investors should:- Buy on dips below €35/share (current price: ~€42), targeting a €55–60 target by 2026 if synergies are realized.- Avoid if EU approval is delayed beyond Q3 2026, risking a valuation reset.
- Monitor Swiggy and iFood's Q1 2025 growth (40% GOV rise, 30% revenue growth) as leading indicators of execution quality.

Conclusion

Prosus's pivot to an operational tech firm is bold but justified. Its AI-driven logistics, synergistic acquisitions, and positive free cash flow make it a key player in Europe's tech landscape. While regulatory and execution risks remain, the long-term thesis—Europe's food and commerce markets consolidating around AI-powered leaders—is compelling. For investors willing to stomach near-term volatility, Prosus offers a rare opportunity to back a European tech champion in the making.

Final Note: Monitor regulatory updates closely and consider a staggered entry if the stock dips on deal-related news.