Global tech investors Prosus announced plans to buy up to 45.4% of shares in its parent company, Naspers. Post the transaction, Prosus free float would double to more than $100 billion (R1.4 trillion), increasing liquidity, market index weightings and enhanced trading dynamics.
The Prosus board believes that the company will benefit from the step-up in size of its free float resulting from the proposed transaction. This transaction is expected to bring increased liquidity, improved market index weightings as a Top 20 STOXX 50 company, and enhanced trading dynamics, creating value for both Prosus and Naspers shareholders over the long term.
As part of the deal, Naspers shareholders will be invited to tender existing Naspers N Ordinary shares for newly issued Prosus Ordinary shares N.
Prosus will acquire 45.4% of the issued Naspers N Ordinary shares.
On completion of the transaction, Prosus will hold a 49.5% interest in Naspers.
The effective economic interest for the Prosus free float in the underlying assets will more than double from around 27% to about 60% through Naspers’ cross-holding. The deal aims to move part of the value of their massive stake in Tencent to Europe from Africa.
“The share offer we have announced today will extend Prosus’s standing as Europe’s largest internet company. By increasing the size of the Prosus free float and more than doubling its ownership of the group’s outstanding global consumer internet portfolio, we create a stable construct that maintains the group’s operational, strategic and financial flexibility,” Bob van Dijk, Group CEO Prosus and Naspers said.
“Prosus shareholders benefit directly as Prosus buys increased exposure to the underlying assets through its acquisition of higher discount Naspers shares.”
Post the deal, Naspers remains domiciled in South Africa as the JSE’s largest listed company and retains control of Prosus.
Naspers will continue to be a significant tax contributor to the South African fiscus. In full-year 2020 Naspers contributed an estimated R10.2 billion in direct and indirect taxes to South African public finances, including an estimated amount of R7.2 billion, which relates to the listing of Prosus in September 2019.
The proposed transaction is expected to generate between R3.8 and R5.8 billion of tax revenues for South Africa. Naspers will continue to actively invest in South Africa through its e-commerce and media assets and backing of early-stage technology businesses via Naspers Foundry
On completion, the transaction will create immediate value for Naspers and Prosus shareholders.
“Since the listing of Prosus in 2019, we have been carefully considering many options to further enhance the group’s structure and we have decided on this route as it is efficient, implementable in the near term and comes with minimal friction costs,” Basil Sgourdos, Group CFO Prosus and Naspers said.
“It preserves Naspers as the largest South Africa-domiciled company on the JSE and its control of Prosus. The two transaction creates immediate value for Naspers shareholders when they swap their higher discount to NAV Naspers shares for lower discount to NAV Prosus shares.
“The offer is constructed to deliver proportional value creation to both sets of shareholders. Value creation on the day will be shared between the Naspers and Prosus free float according to their current ownership of the underlying net asset value.”
The proposed transaction has already been approved by the South African Reserve Bank and is subject to other customary regulatory approvals.
Prosus shareholders will also be asked to approve certain matters required to implement the transaction.
The proposed transaction is expected to be implemented in the third quarter of 2021.