Podcast: Naspers or Prosus?

In JSE Direct, Latest by Simon Brown

Simon Shares

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* I hold geared and ungeared positions.

Naspers or Prosus?

This deal has been delayed due to a bungling of documents and the Annual General Meeting (AGM) will now be in late August with the unbundling happening in September.

Holders of Naspers have two options;

  1. Keep you Naspers shares and get an extra 0.36986 Naspers shares at zero cost. This will reduce your overall cost per share as the new ones are ‘free’ and will have a tax impact when you sell.
  2. The default is to receive new Prosus shares in exchange for each Naspers share you have. This will trigger an immediate tax as your Naspers will be deemed to have been sold.

Remember that Naspers will hold some 73% of Prosus with the latter holding all non SA assets and being inward listed on the JSE.

The idea is that this will unlock value as local asset managers are unable to hold Naspers at full weighting, or even close to full weighting. So with Prosus being listed in Amsterdam we’ll see more buying and hence the price will move higher and Naspers should also track higher but Prosus may move more and we may see a discount open between Prosus and Naspers, much as we see with TenCent and Naspers.

Which will do better?

In a perfect market they’ll largely track each other, but the current +20% weighting of Naspers has limited asset managers to how much they can buy. So Naspers may close that discount gap. But the flip side is being listed on Amsterdam would see the gap stay wide with Porsus doing better. Net-net the value of the two should increase.

As a side note, if the net increase of the two is say 20% that could add as much as 4% to the Top40.

Prosus will immediately go into the same indices as Naspers and if the market cap is enough, will stay in the indices.

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JSE Direct is an independent broadcast and is not endorsed or affiliated with, nor has it been authorised, or otherwise approved by JSE Limited. The views expressed in this programme are solely those of the presenter, and do not necessarily reflect the views of JSE Limited.

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