Naspers to Separate Tencent Stake: A Guide to Today’s Vote

(Bloomberg) -- Naspers Ltd. shareholders will gather in Cape Town on Friday to vote on the proposed spinoff and Amsterdam listing of the company’s international technology interests.

Africa’s largest company by market value is creating a new entity called Prosus NV to hold assets including a 31% stake in Chinese internet giant Tencent Holdings Ltd. that’s worth about $125 billion. Naspers will retain a majority stake in the new group, which will also have investments in internet firms from Germany and the U.S. to India and Brazil.

What’s Happening Today?

Naspers investors will vote on whether to approve the listing, which involves the issue of new shares that will be converted to Prosus stock. At least 75% of shareholders must support the plan for the listing to go ahead as scheduled on Sept. 11.

“The company has consulted with investors extensively over the past few months,” Peter Takaendesa, a fund manager at Mergence Investments in Cape Town, said by text message. “I think the market has a better understanding of the potential benefits of the Prosus listing. Investors are therefore unlikely to oppose.”

The vote will take place immediately after Naspers’s annual general meeting, which starts at 11.15 a.m. local time.

Why Is Prosus Being Created?

Naspers has two main reasons for pushing ahead with the spinoff.

First, the media, technology and internet company has outgrown its listing on Johannesburg’s stock exchange, where it makes up about 25% of the main index. That’s forced many South African shareholders to sell down the stock due to restrictions on their funds’ exposure to a single company. A new listing on Euronext is expected to attract new investors, particularly in Europe, while easing Naspers’s dominance of the JSE.

The second reason is that Naspers is valued at a discount to its stake in Tencent -- $98 billion vs $125 billion at current levels. Separating assets into different entities may help investors revalue different parts of the company’s portfolio and ultimately narrow the valuation gap. To that end, Naspers also spun off its pan-African pay-TV service, MultiChoice Ltd., earlier this year.

Naspers’s Prosus deal “should help to decrease the discount to the see-through value of its Tencent stake,” said Bloomberg Intelligence analyst John Davies.

How Did Naspers Come to Own Tencent?

Naspers, whose name is derived from the Afrikaans words for National Press, started as a newspaper publisher in 1915 before adding TV and internet in the latter part of the century.

Former Chief Executive Officer Koos Bekker -- now the chairman -- invested in Tencent as a startup in 2001, a blockbuster move that’s propelled Naspers’s valuation and international reach ever since. Bekker made way for current CEO Bob Van Dijk in 2014.

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