Operation Value Unlock continues for SA's biggest stock - why it's a "no brainer" to swap your Naspers shares for Prosus
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It’s been a year and a half since Naspers, the JSE’s dominant listing, re-engineered the business by floating its new European subsidiary Prosus on the Amsterdam Stock Exchange. According to CEO Bob van Dijk, the decision immediately unlocked $16bn in value for Naspers shareholders.
Today the group announced another step in Project Value Unlock. Naspers shareholders are being offered to convert the Naspers shares they own into Prosus stock. Naspers shareholders are entitled to tender all of their stock for the swap, but because Prosus wants to keep its Naspers stake below 50% for now, its guarantee is to allow a minimum of 45.4% of each shareholder’s holding to be converted.
As a result of the deal, Naspers’s shareholding in Prosus will fall from 73% to 57%. This will double the free-float of Prosus shares, elevating the stock into the top 20 of the main Eurostoxx Index and thus making it a must-buy for many index trackers. The opposite occurs with Naspers whose share of the main JSE Index falls from 23% to 14%
The major issue for Prosus/Naspers is the huge discount at which the stock trades relative to the market value of their major asset, 31% ownership of Hong Kong-based internet giant Tencent.
Because it is listed in Europe, Prosus trades at a smaller discount to the value of this Tencent stake than does SA-listed Naspers. That gap is widening. For instance, in the past year Prosus shares rose 50% while Naspers gained 30%.
Naspers individual shareholders opting to swap will be liable for capital gains tax. For those who have owned the shares for a long time, that will cost the equivalent of a fifth of the value of what they are swapping. There is no such tax applicable for savings institutions like mutual funds.
For some more colour and detail, here an outline of the deal from this morning’s teleconference hosted by CEO Bob van Dijk and financial director Basil Sgourdos – and the questions posed by BizNews.com's Alec Hogg.... Learn more about your ad choices. Visit megaphone.fm/adchoices
Today the group announced another step in Project Value Unlock. Naspers shareholders are being offered to convert the Naspers shares they own into Prosus stock. Naspers shareholders are entitled to tender all of their stock for the swap, but because Prosus wants to keep its Naspers stake below 50% for now, its guarantee is to allow a minimum of 45.4% of each shareholder’s holding to be converted.
As a result of the deal, Naspers’s shareholding in Prosus will fall from 73% to 57%. This will double the free-float of Prosus shares, elevating the stock into the top 20 of the main Eurostoxx Index and thus making it a must-buy for many index trackers. The opposite occurs with Naspers whose share of the main JSE Index falls from 23% to 14%
The major issue for Prosus/Naspers is the huge discount at which the stock trades relative to the market value of their major asset, 31% ownership of Hong Kong-based internet giant Tencent.
Because it is listed in Europe, Prosus trades at a smaller discount to the value of this Tencent stake than does SA-listed Naspers. That gap is widening. For instance, in the past year Prosus shares rose 50% while Naspers gained 30%.
Naspers individual shareholders opting to swap will be liable for capital gains tax. For those who have owned the shares for a long time, that will cost the equivalent of a fifth of the value of what they are swapping. There is no such tax applicable for savings institutions like mutual funds.
For some more colour and detail, here an outline of the deal from this morning’s teleconference hosted by CEO Bob van Dijk and financial director Basil Sgourdos – and the questions posed by BizNews.com's Alec Hogg.... Learn more about your ad choices. Visit megaphone.fm/adchoices
