Shareholders in technology investor Prosus are set to approve a deal on Friday with parent Naspers that will move most of the economic value of the intertwined companies to Amsterdam.

Under the deal, announced on 11 May, Prosus — which has a 28.9% stake in Chinese Internet giant Tencent — will launch an offer to buy up to 45.4% of Naspers’s shares, issuing new Prosus shares to pay for them.

Approval is virtually assured from the Prosus side as Naspers has kept a controlling stake in Prosus since spinning the company off in a 2019 initial public offering.

In an offer period that will run from 11 July to 13 August, Naspers shareholders who wish to tender their shares to the Prosus offer will receive 2.27 new Prosus shares, a slight premium to Naspers’s current stock price.

Prosus shareholders will also benefit, executives say, as the Naspers shares they are buying trade at a deep discount to the value of their underlying assets. Both companies are worth less than the US$200-billion stake in Tencent that is held by Prosus.

Valuation discrepancy

The deal is intended in part to reduce that valuation discrepancy, and to move more of Naspers out of South Africa where it has an outsized weighting on the JSE.

Once the deal is complete, Prosus will have an interest of roughly 60% in the underlying assets and Naspers roughly 40%. Naspers will retain control of Prosus via special voting rights, and they will continue to share a single board.  — Reported by Toby Sterling, (c) 2021 Reuters