Prosus Investor Unease Fails to Sway Vote on Share Swap

Prosus NV investors approved plans for a share swap with parent company Naspers Ltd. seeking to narrow a valuation gap with its biggest asset, Chinese media giant Tencent Holdings Ltd.

The move was waved through by shareholders owning 90.19% of the company, according to a slide shown in a web presentation on Friday. Dutch-listed Prosus will also issue more of its own stock to give it a 49.5% stake in Naspers and a bigger free float.

The idea is to reduce Naspers’ dominance of the Johannesburg stock exchange, which has forced investors to limit their exposure to the South African company. Naspers owns 73% of Prosus, so the plan sailed through even though 36 shareholders including South Africa’s Public Investment Corporation previously had objected.

In a letter to the company last month, the shareholders with a combined 3.6 trillion rand ($250 billion) in assets under management said the new structure was too complex.

The share swap will lead to “worsening governance outcomes which will do very little to reduce the substantial discounts within Naspers and Prosus and could even widen them,” they said.

Excluding Naspers’s votes, about 53% of Prosus shareholders still voted in favor of the transaction, Prosus said in a statement.

Shares in Prosus and Naspers were little changed after the deal was approved.

Naspers’ initial $34 million investment in WeChat creator Tencent in 2001 has gradually eclipsed the sum of its parts. The Tencent stake was transferred to Prosus in 2019 along with other Naspers investments. Since then, the valuation gap has increased again.

The swap will take Naspers’ weighting on the Johannesburg exchange to between 11% and 13% from 23%, according to Prosus Chief Executive Officer Bob van Dijk.

©2021 Bloomberg L.P.

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