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Naspers Limited (NPSN)

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Monday 21 January, 2019

Naspers Limited

Unbundling of MultiChoice Shares to Naspers

RNS Number : 6789N
Naspers Limited
21 January 2019
 

NASPERS LIMITED 

(Incorporated in the Republic of South Africa)

(Registration number: 1925/001431/06)

Share code: NPN       ISIN: ZAE000015889

LSE ADS code: NPSN    ISIN: US 6315121003

("Naspers" or the "Company")

 

Unbundling of MultiChoice Group Limited Shares to Naspers

shareholders and listing of MultiChoice Group Limited on the

JSE Limited

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART,

IN OR INTO ANY JURISDICTION WHERE IT IS UNLAWFUL TO DISTRIBUTE THIS ANNOUNCEMENT

OR WOULD REQUIRE FURTHER ACTION FOR SUCH PURPOSE

 

1. INTRODUCTION

   Further to the announcement issued by Naspers on the JSE's Stock Exchange News

   Service ("SENS") on 17 September 2018, Naspers proposes to unbundle its video

   entertainment business ("Business") currently held by its wholly owned subsidiary,

   MultiChoice Group Limited ("MultiChoice"), to the holders of its "N" ordinary

   shares and "A" ordinary shares, respectively, and list the shares in MultiChoice on

   the JSE Limited ("JSE") as a primary listing.

 

   To facilitate the Unbundling and Listing (as defined below), MultiChoice was

   incorporated as a wholly owned subsidiary of MIH Holdings Proprietary Limited

   and, subsequent to the restructuring contemplated in the MultiChoice pre-listing

   statement issued today ("Pre-listing Statement"), includes MultiChoice South

   Africa Holdings Proprietary Limited ("MCSA"), Irdeto South Africa Proprietary

   Limited, Main Street 484 Proprietary Limited, Irdeto Holdings B.V., Showmax B.V.,

   MultiChoice Africa Holdings B.V., Digital Mobile Television Proprietary Limited,

   MultiChoice Botswana Proprietary Limited, MultiChoice Namibia Proprietary

   Limited and NMS Insurance Services (SA) Limited (and the subsidiaries, associates

   and/or affiliates of such entities as at the date on which the restructuring was

   implemented).

 

2. BACKGROUND AND RATIONALE FOR THE UNBUNDLING

   Naspers, its subsidiaries, affiliates and associates ("Naspers Group") has evolved

   from a traditional media business into a global internet and entertainment group.

   The Naspers Group has gone through many investment cycles, building successful

   businesses that generate healthy cash flows to support the next investment cycle.

   One of these success stories has been MultiChoice, which is one of the fastest growing

   pay-TV broadcast providers globally, entertaining 13.9 million households (as at

   30 September 2018) in 50 countries across multiple platforms, including digital satellite

   television and digital terrestrial television, as well as over-the-top ("OTT") content.

 

   Naspers has evolved in recent years into two distinct business lines: a high-growth

   global internet business with international focus; and a cash generative, African

   video entertainment business. The Naspers board of directors ("Board"), as part

   of its continuing review of the Naspers business operations, has determined that,

   given their divergent paths, there is no longer a strategic rationale for keeping both

   business lines together and there are no synergies between the two businesses.

   This also reflects the Naspers Group's continued shift towards becoming a global

   consumer internet company.

 

   As a result, the Board intends to unbundle ("Unbundling") the Business currently

   held by MultiChoice through a pro rata distribution in specie for no consideration of

   all the issued shares in MultiChoice held by Naspers, to holders of the "N" ordinary

   shares and "A" ordinary shares in Naspers, in terms of section 46 of the South

   African Companies Act, 2008 (as amended) ("Companies Act") and section 46 of

   the South African Income Tax Act, 1962 ("Income Tax Act"), and, simultaneously

   to list the issued shares in MultiChoice on the main board of the JSE as a primary

   listing ("Listing"). The Unbundling and Listing will result in Naspers shareholders

   holding a direct interest in MultiChoice rather than holding that interest through

   Naspers.

 

   The Board is of the view that the Unbundling could unlock value for Naspers

   shareholders. In particular, the Board expects the Unbundling and Listing to:

 

   - create an empowered, top 40 JSE-listed African entertainment company that is

     profitable and cash-generative, and therefore equipped to be at the forefront of

     the African digital transformation;

 

   - increase investment options for South Africans and international investors, while

     providing them with an opportunity to support a company focused on investment,

     growth and local community empowerment in South Africa, sub-Saharan Africa

     and the adjacent islands;

 

   - reinforce MultiChoice and Naspers's commitment to broad, socio-economic

     transformation in South Africa, through the allocation of an additional 5%

     stake in MCSA to, collectively, Phuthuma Nathi Investments (RF) Limited and

     Phuthuma Nathi Investments 2 (RF) Limited ("Phuthuma Nathi"), as detailed

     further below;

 

   - complete the transformation of Naspers into a global consumer internet

     company; and

 

   - improve focus of the respective management teams to pursue growth

     opportunities in the region for MultiChoice and Naspers.

 

   Both Naspers and MultiChoice will remain South African domiciled companies with

   their primary listings of shares on the JSE.

 

   In addition, Naspers will continue to operate and invest in several companies

   in South Africa, particularly in its core focus areas of consumer internet and

   ecommerce. Currently, these companies include Media24, Takealot, Mr D, OLX,

   Property24, AutoTrader SA, the Frontier Car Group and PayU. As an indication of

   Naspers's commitment to South Africa, Naspers has invested R6.9 billion over the

   past three years in developing its existing South African businesses and through

   M&A activity. In addition, Naspers also pledged (at the South Africa Investment

   Conference, that was held in October 2018) to invest a further R4.6 billion in new

   and existing technology companies in South Africa.

 

3. MULTICHOICE

   MultiChoice, its subsidiaries, affiliates and associates ("MultiChoice Group") is

   one of the leading video entertainment operators on the African continent, and one

   of the fastest growing pay-TV broadcast providers globally, entertaining 13.9 million

   households (as at 30 September 2018) across 50 countries. Its carefully curated

   local and international content is distributed across multiple platforms, including

   digital satellite and terrestrial television, as well as through OTT solutions. The

   MultiChoice Group is structured around the following three business segments:

 

   - South Africa, the MultiChoice Group's division that offers digital satellite

     television and subscription video-on-demand services to 7.2 million subscribers in

     South Africa (as at 30 September 2018). Connected Video, which forms part of the

     South Africa segment from a financial reporting standpoint, delivers online video

     entertainment services to subscribers;

 

   - Rest of Africa, the MultiChoice Group's division which offers digital satellite,

     online services and digital terrestrial television services to 6.7 million subscribers

     across Africa (as at 30 September 2018); and

 

   - Technology, which includes the MultiChoice Group's leading digital platform and

     application security division, Irdeto.

 

   As set out in the Pre-listing Statement issued today, in the past two fiscal years,

   the MultiChoice Group has grown its subscriber base by 14% compound annual

   growth rate ("CAGR"), and generated resilient organic revenue growth, while

   its profitability has improved. For the financial year ended 31 March 2018, the

   MultiChoice Group's subscriber base was 13.5 million, which represented a 13%

   increase over the financial year ended 31 March 2017. The MultiChoice Group's

   revenues were R47.5 billion compared to R47.7 billion the year before. The table

   below is replicated from the Pre-listing Statement and summarises the MultiChoice

   Group's subscriber base, revenue, and trading profit over the past three years.

 

   MultiChoice Group Financial Performance Summary

  


Unit

FY15/16

FY16/17

FY17/18  

   Pay-TV subscribers

'000

10 411

11 942

13 476  

   Revenues

ZAR million

46 797

47 708

47 452  

   South Africa

ZAR million

29 116

31 849

32 702  

   Rest of Africa

ZAR million

16 005

14 208

13 106  

   Technology

ZAR million

1 676

1 651

1 644  

   Organic revenue growth

%

n.a.

7.3%

6.6%  

   Trading profit

ZAR million

9 108

5 251

6 321  

   Trading profit margin %

%

19.5%

11.0%

13.3%  

 

   * The MultiChoice Group excludes the impact of currency fluctuations and mergers and acquisitions to

     assess key metrics on an organic basis, such as organic revenue growth outlined in the table above,

     which the MultiChoice Group considers the real growth of the underlying business segments.

 

   As a pioneer in the African pay-TV ecosystem, the MultiChoice Group played

   an important role in making information and entertainment easily accessible

   to the people of Africa. As a leading business in the region, the MultiChoice

   Group's investments have brought both social and economic benefits to the

   communities in which it operates. Today, the MultiChoice Group employs more

   than 9 000 people in Africa and indirectly creates economic prosperity for over

   20 000 more who are employed by its various partners and suppliers across the

   continent. The MultiChoice Group remains committed to broad, socio-economic

   transformation in South Africa, most notably through its Phuthuma Nathi share

   schemes that are aimed at empowering local communities.

 

4. B-BBEE TRANSACTION

   In 2006 and 2007, Naspers undertook one of the largest Broad-based Black Economic

   Empowerment transactions ("B-BBEE") in South Africa by enabling the acquisition

   of a stake in MCSA by black investors. Naspers arranged, structured and funded

   the sale of a 20% interest in MCSA to black investors through Phuthuma Nathi.

   Today Phuthuma Nathi comprises approximately 90 000 individual and institutional

   shareholders and its shares are listed on the Equity Express Securities Exchange.

   Through Phuthuma Nathi, MCSA has provided long-term, far-reaching benefits to

   B-BBEE shareholders, with an estimated return on investment of approximately

   17 times. Phuthuma Nathi shareholders have benefitted from:

 

   - Capital growth: Phuthuma Nathi shares have delivered meaningful share

     price appreciation - an initial investment of R10 per share (at the time of the

     B-BBEE transactions in 2006/2007) has increased to a price of approximately

     R130 per share as of the Last Practicable Date, which represents a CAGR of

     approximately 24%.

 

   - Cash flow: MCSA's strong financial performance (particularly cash

     generation) enabled meaningful dividend payments to Phuthuma Nathi

     shareholders which resulted in Phuthuma Nathi being able to repay its

     vendor funding in 2014, two years ahead of schedule. As such, Phuthuma

     Nathi now realises the full value of its MCSA dividends unencumbered,

     which has further driven the attractive cash flow profile. To date, Phuthuma

     Nathi shareholders have received approximately R6.2 billion in dividends,

     relative to a total investment of R675 million, which reflects an internal rate

     of return of approximately 30%.

 

   To underpin the MultiChoice and Naspers commitment to broad, socio-economic

   transformation and B-BBEE, Naspers and MultiChoice recently agreed to

   implement a new empowerment transaction at MCSA. This new transaction will be

   executed by allocating an additional 5% stake in MCSA to Phuthuma Nathi for no

   consideration (the "2018 Empowerment Transaction"). The 2018 Empowerment

   Transaction will be implemented on the Unbundling Operative Date and upon

   implementation, the Phuthuma Nathi shareholders' indirect interest in MCSA will

   increase from 20% to 25% and result in a 25% increase in Phuthuma Nathi's dividend

   flows. The Listing of MultiChoice may also increase Phuthuma Nathi's and its

   shareholders' potential upside in future value creation as a result of having a listed

   reference point.

 

   Further, post-implementation of the Listing and subject to obtaining the necessary

   Phuthuma Nathi board and shareholder approvals, it is MultiChoice's intention

   to enable the exchange of 25% of the Phuthuma Nathi shareholders' original

   shareholding (before the allocation of the additional 5% discussed above) for

   MultiChoice shares that will be freely tradeable, which is expected to unlock

   incremental value for Phuthuma Nathi shareholders.

 

5. NASPERS

   Founded in 1915, Naspers is a global internet and entertainment group and one of

   the largest technology investors in the world, operating some of the world's leading

   platforms in internet, video entertainment and media. Today, Naspers invests and

   operates in more than 120 countries and markets that the group believes have long-

   term growth potential, including China, Central and Eastern Europe, Russia, Africa,

   North America, Latin America, India, Southeast Asia and the Middle East.

  

   Naspers seeks to address big societal needs through technology by identifying

   changes in consumer behaviour early and building businesses that have scale, are

   profitable and generate healthy cash flows. The group's principal operations are

   in internet services and ecommerce (in particular, online classifieds, payments,

   online food delivery, etail, and online travel services) and media. The companies that

   Naspers has built, acquired and invested in are leaders in many of their markets,

   connecting people to each other and the wider world, and helping them improve

   their daily lives.

 

   In the financial year ended 31 March 2018, the Naspers Group revenue, measured

   on an economic interest basis, was US$ 20.1 billion, the trading profit was

   US$ 3.4 billion and core headline earnings were US$ 2.5 billion. Naspers executed

   well in the first half of the 2019 financial year, with Group revenue, measured on an

   economic interest basis, of US$ 11 billion, trading profit of US$ 2 billion and core

   headline earnings of US$ 1.7 billion.

 

   The Naspers Group's major listed associate investments include its 31.2% effective

   interest in Tencent Holdings Limited, the leading provider of internet and mobile

   telecommunication services in China, its 28.4% effective interest in Mail.ru Group

   Limited, one of the two leading internet, entertainment and social network platforms

   in Russia, its 43.1% effective interest in MakeMyTrip Limited, one of the largest

   online travel groups in India, and its 22.8% effective interest in Delivery Hero GmbH,

   a global leader in online food ordering.

 

6. UNBUNDLING

   6.1 Ratio of entitlement

       The Board intends to implement the Unbundling by way of a pro rata distribution

       in specie of ordinary shares of no par value in MultiChoice ("MultiChoice

       Shares") for no consideration to Naspers shareholders in terms of section 46 of

       the Companies Act and section 46 of the Income Tax Act. Naspers will distribute

       438 837 468 MultiChoice Shares ("Unbundled MultiChoice Shares") (being

       100% of the issued MultiChoice Shares and all of the MultiChoice Shares held

       by Naspers) to Naspers shareholders on the Naspers securities register at 17:00

       South African standard time on Friday, 1 March 2019 ("Unbundling Record

       Date and Time") on the terms as set out in this announcement. For more

       information on the MultiChoice American depository shares ("ADS") facility,

       and the issue of MultiChoice ADSs to holders of Naspers ADSs, please see

       paragraph 11 below.

 

       Naspers shareholders holding "A" and "N" ordinary shares ("Naspers Shares")

       on the Naspers securities register on the Unbundling Record Date and Time will

       be transferred one Unbundled MultiChoice Share for every one "N" ordinary

       share held and one Unbundled MultiChoice Share for every five "A" ordinary

       shares held. With effect from the Unbundling Operative Date (expected to

       be 09:00 on Monday, 4 March 2019), the Unbundling will be implemented and

       beneficial ownership in the Unbundled MultiChoice Shares will pass to Naspers

       shareholders.

 

       The transfer of Unbundled MultiChoice Shares to Naspers shareholders

       holding "A" ordinary shares could result in fractional entitlements for such

       shareholders. For more detail on the treatment of fractional entitlements,

       please see paragraph 6.2 below.

 

   6.2 Fractional entitlements, Cash Proceeds and Applicable Rate

       In accordance with the JSE Listings Requirements, fractional entitlements

       will be rounded down to the nearest whole number and the aggregated excess

       fractions of the Unbundled MultiChoice Shares to which a Naspers shareholder

       holding "A" ordinary shares on the Unbundling Record Date and Time would

       otherwise be entitled will not be transferred to them following the Unbundling,

       but will instead be sold on their behalf in the market as soon as practicable

       after the Unbundling. Fractional entitlements will only be paid to Naspers

       shareholders holding "A" ordinary shares.

 

       The cash proceeds of the sale of fractional entitlements payable to Naspers

       shareholders holding "A" ordinary shares in respect of MultiChoice Shares

       ("Cash Proceeds") will be paid net of any applicable taxes or costs.

       Accordingly, to the extent that any shareholder is in doubt of his or her

       tax position, such shareholder should consult an appropriate independent

       professional adviser.

 

       The Cash Proceeds will be determined with reference to the volume weighted

       average price in South African Rand of a MultiChoice Share traded on the JSE

       on the first JSE trading day (expected to be Wednesday, 27 February 2019)

       after the last day to trade in the Naspers Shares in order to participate in

       the Unbundling (expected to be Tuesday, 26 February 2019) ("LDT Date")

       discounted by 10%.

 

       The basis for the Cash Proceeds will be announced by Naspers on SENS two

       JSE trading days after the LDT (expected to be Thursday, 28 February 2019).

 

   6.3 Expected timetable of principal events

       The following indicative timetable sets out expected dates for the

       implementation of the Unbundling and the Listing.1

 

 

 

 

       Event

Time and/or date(2)

      


       Publication of this announcement and


       declaration information

Monday, 21 January 2019

       Pre-listing Statement and Abridged Pre-listing


       Statement published on SENS

Monday, 21 January 2019

       Finalisation announcement expected to be


       released on SENS

Tuesday, 19 February 2019

       Last day to trade in order to participate in the


       Unbundling(3)

Tuesday, 26 February 2019

       Admission to listing and trading of MultiChoice


       Shares on the JSE from commencement of trade


       (MCG ISIN ZAE000265971)

Wednesday, 27 February 2019

       Naspers Shares trade "ex" entitlement to


       receive the Unbundled MultiChoice Shares

Wednesday, 27 February 2019

       Announcement to be released on SENS on the

By 11:00 on

       fractional Cash Proceeds of "A" ordinary shares(4)

Thursday, 28 February 2019

       The ratio apportionment of expenditure and


       market value in respect of "N" ordinary shares


       for the Unbundling released on SENS

Thursday, 28 February 2019

       Unbundling Record Date and Time (both in


       respect of Naspers shareholders and Naspers


       ADS holders)

17:00 on Friday, 1 March 2019

       Unbundling Operative Date

09:00 on Monday, 4 March 2019

       Naspers shareholders' accounts at Central


       Securities Depositary Participants and/or


       brokers expected to be updated and credited


       with Unbundled MultiChoice Shares

Monday, 4 March 2019

       Despatch of share certificates for MultiChoice


       Shares to Naspers shareholders

Monday, 4 March 2019

       Bank of New York Mellon, as depositary, expects


       to receive credit of Unbundled MultiChoice


       Shares at their custodian banks in South Africa


       for proportion allocated to ADS and to issue


       ADSs to holders of Naspers ADSs

Monday, 4 March 2019

 

       Notes:

       (1) The expected dates and times listed above may be subject to change. Any material changes will

           be announced on SENS.

       (2) All references to times are to South African standard time, unless otherwise stated.

       (3) There will be no dematerialisation or rematerialisation of "N" ordinary shares from Wednesday,

           27 February 2019 up to and including Friday, 1 March 2019.

       (4) The Unbundling will result in certain holders of "A" ordinary shares being entitled to fractions

           of Shares. Any fractional entitlements to Shares which holders of "A" ordinary shares are

           entitled to will be dealt with in accordance with the Naspers Announcement.

 

      Shareholders should anticipate their holdings of Naspers Shares on the

      Unbundling Record Date and Time by taking into account all unsettled trades

      concluded on or before the LDT Date to participate in the Unbundling which is

      due to be settled on the Unbundling Record Date and Time.

 

  6.4 Trading and settlement

      Naspers shareholders who hold their Naspers shares in certificated form,

      ("Certificated Naspers Shareholders") will be issued their respective

      Unbundled MultiChoice Shares in certificated form. Pursuant to the

      Unbundling, share certificates will be posted, at the risk of the Certificated

      Naspers Shareholders, by registered post in South Africa on about the first

      business day after the Unbundling Record Date ("Operative Date") to the

      addresses reflected in the securities register of Naspers on the Unbundling

      Record Date.

     

      Such Certificated Naspers Shareholders are advised that they will have

      to dematerialise the Unbundled MultiChoice Shares received by them in

      certificated form prior to trading in such MultiChoice Shares on the JSE.

      Naspers Shareholders who hold their Naspers Shares in dematerialised form

      ("Dematerialised Naspers Shareholders") will have their accounts at their

      CSDP or broker updated on the Operative Date with the relevant Unbundled

      MultiChoice Shares pursuant to the Unbundling.

    

      Documents of title in respect of Naspers Shares ("Documents of Title") are

      not required to be surrendered in order to receive the Unbundled MultiChoice

      Shares.

    

      To the extent that Certificated Naspers Shareholders wish to receive their

      Unbundled MultiChoice Shares in dematerialised form, those Naspers

      shareholders should contact Link Market Services Proprietary Limited

      ("Transfer Secretaries") directly.

 

  6.5 Approvals

      Naspers shareholder approval is not required for the Unbundling under the

      Companies Act and the JSE Listings Requirements.

     

      Naspers has obtained approval from the South African Reserve Bank for the

      Unbundling and the Listing.

    

      The JSE has approved the admission of the entire issued share capital of

      MultiChoice in the "5553 - Broadcasting and Entertainment" sector of the

      main board of the JSE under the abbreviated name "MC Group" and share

      code "MCG" with effect from the commencement of trading on Wednesday,

      27 February 2019.

    

      As set out in the Pre-listing Statement, pursuant to a provision of the MultiChoice

      memorandum of incorporation, MultiChoice is permitted to reduce the voting

      rights of shares in MultiChoice (including MultiChoice Shares deposited in terms

      of the ADS facility) so that the aggregate voting power of MultiChoice Shares

      that are presumptively owned or held by foreigners to South Africa (as envisaged

      in the MultiChoice memorandum of incorporation) will not exceed 20% of the

      total voting power in MultiChoice. This is to ensure compliance with certain

      statutory requirements applicable in South Africa. For this purpose, MultiChoice

      will presume in particular that all MultiChoice Shares deposited in terms of

      the MultiChoice ADS facility are owned or held by foreigners to South Africa,

      regardless of the actual nationality of the MultiChoice ADS holder. For further

      information in relation to the variable voting structure in place in respect of

      MultiChoice, please refer to the Pre-listing Statement.

 

7. PRO FORMA FINANCIAL EFFECTS OF THE UNBUNDLING

   The table below sets out the pro forma financial effects of the Unbundling.

   Based on Naspers's consolidated interim results for the period ended

   30 September 2018, the pro forma financial effects of the Unbundling on the earnings

   per share ("EPS"), diluted EPS, headline earnings per share ("HEPS"), diluted

   HEPS, core HEPS, net asset value ("NAV") and tangible NAV ("TNAV") of the

   Naspers Group are set out below.

  

   These financial effects are prepared for illustrative purposes only to assist

   shareholders to assess the impact of the Unbundling and, because of their nature,

   may not give a fair presentation of the effect of the Unbundling on Naspers's results

   of operations.

  

   The summarised pro forma financial effects have been prepared in a manner

   consistent in all respects with International Financial Reporting Standards

   ("IFRS"), the accounting policies adopted by Naspers as at 30 September 2018 and

   the JSE Listings Requirements. The summarised pro forma financial effects have

   not been audited, or reported on, by Naspers's auditors or reporting accountants.

   The pro forma financial effects are the responsibility of the Board. The material

   assumptions used in the preparation of the pro forma financial effects are set out in

   the notes following the table below.

 


Period ended


30 September 2018


Prior to

Post

   Per "N" ordinary share

Unbundling

Unbundling


Unaudited

Pro forma

   EPS (US cents)

792

788

   Diluted EPS (US cents)

783

779

   HEPS (US cents)

640

636

   Diluted HEPS (US cents)

632

627

   Core HEPS (US cents)

385

362

   NAV (US cents)

6 208

6 113

   TNAV (US cents)

5 435

5 413

   Issued share capital ('000)

438 656

438 656

   Issued share capital net of treasury shares ('000)

431 943

431 943

   Weighted average number of shares in issue ('000)

432 126

432 126

   Diluted weighted average number of shares in



   issue ('000)

433 522

433 522

 

8. EXCHANGE CONTROL REGULATIONS

   The Unbundled MultiChoice Shares are not freely transferable from the common

   monetary area and must be dealt with in terms of the South African Exchange Control

   Regulations, 1961 (as amended) ("Exchange Control Regulations"). The following

   summary of the Exchange Control Regulations is intended as a guide only and is not a

   comprehensive statement of the Exchange Control Regulations or advice. Shareholders

   who are in any doubt regarding the Exchange Control Regulations should contact their

   own professional advisers. This summary is based on the laws and regulations as in

   force and as applied in practice as at the date hereof and is subject to changes to those

   laws and regulations and practices subsequent to such date.

 

 8.1  Emigrants from the Common Monetary Area consisting of South

      Africa, the Republic of Namibia and the Kingdoms of Lesotho and

      eSwatini ("CMA")

 

      Any share certificates that may be issued by MultiChoice to emigrants from

      the CMA will be endorsed "non-resident" in accordance with the Exchange

      Control Regulations.

 

      Uncertificated, Unbundled MultiChoice Shares and/or securities will be

      credited directly to the emigrants' respective emigrant share accounts at

      the CSDP or broker controlling their remaining portfolios and an appropriate

      electronic entry will be made in the relevant register reflecting a "non-resident"

      endorsement. The CSDP or broker will ensure that the emigrant adheres to the

      Exchange Control Regulations.

 

      Any Unbundled MultiChoice Shares and/or securities issued in certificated

      form, cash dividends and residual cash payments based on emigrants'

      Unbundled MultiChoice Shares and/or securities controlled in terms of the

      Exchange Control Regulations will be forwarded to the authorised dealer in

      foreign exchange controlling their remaining assets.

 

  8.2 Residents outside of the CMA

      Any share certificates that may be issued by MultiChoice to non-residents of

      the CMA will be endorsed "non-resident" in accordance with the Exchange

      Control Regulations.

 

      Uncertificated Unbundled MultiChoice Shares and/or securities will be

      credited directly to the non-resident's non-resident share accounts at the

      CSDP or broker controlling their portfolios and an appropriate electronic entry

      will be made in the relevant register reflecting a "non-resident" endorsement.

      The CSDP or broker will ensure that the non-resident adheres to the Exchange

      Control Regulations.

 

      Cash dividends and residual cash payments due to non-residents are freely

      transferable from South Africa, subject to being converted into a currency

      other than Rand or paid for the credit of a non-resident Rand account.

 

9. TAXATION

   The following summary describes certain tax consequences in connection with the

   Unbundling. This summary is based on the laws as in force and as applied in practice

   as at the date hereof and is subject to changes to those laws and practices subsequent

   to such date. In the case of persons who are non-residents of South Africa for income

   tax purposes, this summary should be read in conjunction with the provisions of any

   applicable double tax agreement between South Africa and their country of residence.

   Naspers has not attempted to qualify the Unbundling as a tax-free transaction to

   Naspers shareholders in terms of the rule of any jurisdiction other than South Africa.

   Accordingly, the Unbundling of the Unbundled MultiChoice Shares may constitute

   a taxable transaction in any such jurisdiction. Non-resident Naspers shareholders

   are advised to consult their professional advisers regarding the tax treatment of

   the Unbundling in light of the tax laws in their respective jurisdictions and double

   taxation agreements concluded between South Africa and their countries of tax

   residence. The summary is intended as a general guide only and is not comprehensive

   or determinative and should not be regarded as tax advice. Accordingly, if you are in

   any doubt about your tax position you should consult an appropriate independent

   professional adviser.

 

   The Unbundling will constitute a disposal by Naspers of all of the Unbundled

   MultiChoice Shares to the Naspers shareholders. It is the intention that the disposal

   will be effected utilising the tax concessions provided for in section 46 of the

   Income Tax Act. The concessions provided for in section 46 of the Income Tax Act are

   outlined below:

 

   Disposal of Unbundled MultiChoice Shares by Naspers

   The distribution of Unbundled MultiChoice Shares by Naspers, in terms of the

   Unbundling, will be disregarded by Naspers in determining its taxable income or

   assessed loss in the tax year that the Unbundling takes place. On the basis that

   Naspers holds the Unbundled MultiChoice Shares as capital assets, the Unbundling

   should not attract capital gains tax as levied in terms of the Eighth Schedule of the

   Income Tax Act ("CGT").

 

   Dividends tax and returns of capital

   In terms of sections 46(5) and 46(5A) of the Income Tax Act, the distribution of the

   Unbundled MultiChoice Shares must be disregarded in determining any liability for

   dividends tax and must also not be treated as a return of capital for the purposes of

   paragraph 76B of the Eighth Schedule to the Income Tax Act.

 

   Naspers Shares held as trading stock

   Any Naspers shareholder holding Naspers Shares as trading stock will be deemed

   to acquire the Unbundled MultiChoice Shares as trading stock. The combined

   expenditure (for the purposes of income tax) of such Naspers Shares and

   Unbundled MultiChoice Shares will be the amount originally taken into account

   by the Naspers shareholder prior to the Unbundling in respect of those Naspers

   Shares, as contemplated in section 11(a), section 22(1), or section 22(2) of the

   Income Tax Act.

 

   The original expenditure incurred in respect of the "N" ordinary shares will be

   apportioned between the Unbundled MultiChoice Shares and the "N" ordinary

   shares by applying the ratio that the market value of Unbundled MultiChoice

   Shares bears to the sum of the market value of the Unbundled MultiChoice Shares

   and the "N" ordinary shares at the end of the day after the LDT Date, being

   determined with reference to Naspers and MultiChoice closing share prices on the

   first business day after the LDT Date. Naspers will advise Naspers holders of "N"

   ordinary shares of the specified ratio by way of an announcement to be released

   on SENS on the second business day after the LDT Date. This ratio must be used

   in the determination of any profits or losses derived on any future disposals of the

   Unbundled MultiChoice Shares or Naspers Shares.

  

   The expenditure so allocated to the Unbundled MultiChoice Shares will reduce the

   expenditure of the Naspers Shares held, thus allocating the expenditure between

   the Naspers Shares and the Unbundled MultiChoice Shares.

 

   Naspers Shares held as capital assets

   Any Naspers shareholder holding Naspers Shares as capital assets will be deemed

   to acquire the Unbundled MultiChoice Shares as capital assets. The original

   expenditure incurred prior to the Unbundling in respect of the Naspers Shares, that

   is allowable in terms of paragraph 20 of the Eighth Schedule to the Income Tax Act,

   and (where applicable) the CGT valuation of the Naspers Shares, as contemplated

   in paragraph 29 of the Eighth Schedule to the Income Tax Act, will be apportioned

   between the Unbundled MultiChoice Shares and the Naspers Shares by applying

   the ratio that the market value of Unbundled MultiChoice Shares bears to the sum

   of the market values of the Unbundled MultiChoice Shares and Naspers Shares in

   relation to the "N" ordinary shares at the end of the day after the LDT Date, being

   determined with reference to Naspers and MultiChoice closing share prices on the

   first business day after the LDT Date.

  

   Naspers will advise Naspers holders of "N" ordinary shares of the specified ratio

   by way of an announcement to be released on SENS on the second business day

   after the LDT Date. This ratio must be used in the determination of the capital gain

   or loss derived on any future disposals of the Unbundled MultiChoice Shares or

   Naspers Shares.

  

   The expenditure (and CGT valuation, where applicable) so allocated to the

   Unbundled MultiChoice Shares will reduce the expenditure (and CGT valuation,

   where applicable) of the Naspers Shares held, thus allocating this cost history

   between the Naspers Shares and the Unbundled MultiChoice Shares.

  

   Naspers shareholders will be deemed to have acquired the Unbundled MultiChoice

   Shares on the date on which the Naspers Shares were originally acquired.

 

10. OVERSEAS SHAREHOLDERS

    The following summary describes the restrictions applicable to Naspers shareholders

    in terms of the Unbundling who have registered addresses outside South Africa

    and/or who are nationals, citizens or residents of countries other than South Africa

    ("Overseas Shareholders") or who are persons (including, without limitation,

    custodians, nominees and trustees) who have a contractual or legal obligation to

    forward this announcement to a jurisdiction outside South Africa, or who hold Naspers

    Shares for the account or benefit of any such Overseas Shareholder and will therefore

    hold MultiChoice Shares in a similar manner and hence may have an impact on

    shareholders.

   

    The Unbundling will be implemented as a pro rata distribution in specie for no

    consideration to all Naspers shareholders recorded as such in the register of

    Naspers on the Unbundling Record Date and Time.

  

    The distribution of Unbundled MultiChoice Shares to Overseas Shareholders

    in terms of the Unbundling may be affected by the laws of such Overseas

    Shareholders' relevant jurisdiction. Overseas Shareholders should consult their

    professional advisers as to whether they require any governmental or other consent

    or need to observe any other laws, requirements or formalities to receive or access

    this announcement and/or enable them to take up their entitlements and/or have

    Unbundled MultiChoice Shares transferred to them in terms of the Unbundling.

 

    It is the responsibility of any Overseas Shareholder (including, without limitation,

    nominees, agents and trustees for such persons) being notified by this

    announcement of the Unbundling and wishing to take up their entitlement to

    Unbundled MultiChoice Shares and/or have Unbundled MultiChoice Shares

    transferred to them in terms of the Unbundling to satisfy themselves as to the

    full observance of the applicable laws of any relevant territory, including obtaining

    any requisite governmental or other consents, observing any other requisite laws,

    requirements or formalities and paying any issue, transfer or other taxes due in

    such territories.

  

    Accordingly, persons (including, without limitation, nominees, agents and trustees)

    being notified in terms of this SENS announcement should not distribute or send

    the same to any person in, or citizen or resident of, or otherwise into any jurisdiction

    where to do so would or might contravene applicable law or regulation including

    local securities laws or regulations. Any person who does distribute this SENS

    announcement into any such territory (whether under a contractual or legal

    obligation or otherwise) should draw the recipient's attention to the contents of

    this paragraph.

 

    Naspers reserves the right, but shall not be obliged, to treat as invalid any

    distribution or transfer of Unbundled MultiChoice Shares in terms of the

    Unbundling, which appears to Naspers or its agents to have been executed, effected

    or dispatched in a manner which may involve a breach of the securities laws or

    regulations of any jurisdiction; or if Naspers believes (in its discretion) or its agents

    believe that the same may violate applicable legal or regulatory requirements;

    or if Naspers believes (in its discretion) that it is prohibited or unduly onerous or

    impractical to distribute or transfer the Unbundled MultiChoice Shares to such

    Overseas Shareholder in terms of the Unbundling.

  

    If an Overseas Shareholder is of the view that the distribution or transfer of

    Unbundled MultiChoice Shares in terms of the Unbundling to such Overseas

    Shareholder may involve a breach of the securities laws or regulations or violate

    applicable legal or regulatory requirements; such Overseas Shareholder must as

    soon as reasonably practicable notify Naspers of such fact or circumstance.

    Naspers shall be entitled (in its discretion), including in either of the aforementioned

    instances, to do all things necessary or desirable to ensure compliance with

    applicable law and/or regulation including selling Unbundled MultiChoice Shares

    that would otherwise have been transferred to the Overseas Shareholder under the

    Unbundling on their behalf and at their risk, with the net proceeds of such sale (after

    deduction of any applicable taxes, withholdings or costs) to be paid to the Overseas

    Shareholder. In this regard, the Unbundled MultiChoice Shares may be aggregated

    and disposed of on the JSE in an orderly manner by the Transfer Secretaries on

    behalf of and for the benefit of such Overseas Shareholders as soon as is reasonably

    practical after the implementation of the Unbundling at the best price that can

    reasonably be obtained at the time of sale.

 

11. ADS FACILITY

    Naspers has an ADS programme managed by Bank of New York Mellon as

    depository. MultiChoice expects to establish an ADS facility in the United States

    of America. Bank of New York Mellon, as depositary for the MultiChoice ADS

    facility, will deliver the MultiChoice ADSs. Each MultiChoice ADS will represent

    an ownership interest in MultiChoice Shares and a pro rata share of any other

    securities, cash or other property that may be held by the depositary, under the

    terms of the deposit agreement to be entered into between MultiChoice, the

    depositary and the registered holders, indirect holders and beneficial owners of the

    MultiChoice ADSs from time to time.

 

    Following implementation of the Unbundling, holders of the Naspers ADSs at

    the Unbundling Record Date and Time will be issued on the Operative Date with

    MultiChoice ADSs in respect of their entitlement to Unbundled MultiChoice Shares

    in terms of the Unbundling.

 

    On the Unbundling Operative Date, the MultiChoice Shares will not be listed on

    any securities exchange in the United States of America, and MultiChoice expects

    to rely on an exemption from registration under the US Securities Exchange Act of

    1934 (as amended) provided by Rule 12g3-2(b) thereunder.

 

    MultiChoice will not treat MultiChoice ADS holders as its shareholders and,

    accordingly, MultiChoice ADS holders will not have shareholders' rights, which are

    governed by South African law. The ADS holders' rights will be governed by the

    deposit agreement, which will be governed by the laws of the State of New York. The

    deposit agreement will also set out the rights and obligations of the depositary.

   

    The depositary or its nominee will be the record holder of the MultiChoice Shares

    underlying the ADSs and, therefore, ADS holders must rely on the depositary to

    exercise shareholder rights on their behalf. ADS holders may exercise their voting

    rights with respect to the MultiChoice Shares underlying the ADSs in accordance

    with the provisions of the deposit agreement. The depositary will not itself exercise

    any voting discretion in respect of the MultiChoice Shares. Upon receipt of

    instructions from an ADS holder pursuant to the deposit agreement, if MultiChoice

    asked the depositary to solicit voting instructions, the depositary is required to

    endeavour (insofar as practicable and permitted under MultiChoice's memorandum

    of incorporation) to vote or cause to be voted the MultiChoice Shares represented

    by the ADSs in accordance with such instructions. If MultiChoice did not request

    the depository to solicit voting instructions, ADS holders can still give voting

    instructions and the depository may, but is not required to, endeavour to carry out

    those instructions.

 

    ADS holders will be required to pay fees under the terms of the deposit agreement,

    including fees for cancellation of ADSs and upon dividends and distributions. The

    depositary has agreed to reimburse MultiChoice for certain reasonably incurred

    expenses directly related to the ADS facility.

 

    ADS holders should read the entire deposit agreement and the form of the

    depositary receipt. A copy of the deposit agreement will be filed as an exhibit to the

    registration statement on Form F-6 to be filed by or on behalf of MultiChoice with

    the US Securities Exchange Commission. ADS holders may find the registration

    statement and the deposit agreement on the US Securities Exchange Commission's

    website at http://www.sec.gov.

 

    For further information on the ADS Facility, please refer to the Pre-listing Statement.

 

    The Pre-listing Statement

    A Pre-listing Statement containing information on MultiChoice and the Listing was

    issued by MultiChoice today and can be accessed on Naspers's website at

    https://www.naspers.com/ and MultiChoice's website at www.multichoice.com.

 

    About Naspers

    Founded in 1915, Naspers is a global internet and entertainment group and one of

    the largest technology investors in the world. Operating in more than 120 countries

    and markets with long-term growth potential, Naspers builds leading companies

    that empower people and enrich communities. It runs some of the world's leading

    platforms in internet, video entertainment and media.

   

    Naspers companies connect people to each other and the wider world, help people

    improve their daily lives, and entertain audiences with the best of local and global

    content. Every day, millions of people use the products and services of companies

    that Naspers has invested in, acquired or built, including Avito, Brainly, BYJU'S,

    Codecademy, eMAG, Honor, ibibo, iFood, letgo, Media24, Movile, MultiChoice, OLX,

    PayU, Showmax, SimilarWeb, Swiggy, Takealot, Udemy and WeBuyCars.

   

    Similarly, hundreds of millions of people have made the platforms of its associates a

    part of their daily lives: Tencent (www.tencent.com; SEHK 00700), Mail.ru

    (www.corp.mail.ru; LSE: MAIL), MakeMyTrip Limited (www.makemytrip.com;

    NASDAQ:MMYT) and DeliveryHero (www.deliveryhero.com; Xetra: DHER).

    Naspers has a primary listing on the Johannesburg Stock Exchange (NPN.SJ) and a

    secondary listing on the A2X Exchange (NPN.AJ) in South Africa, and has an ADS

    listing on the London Stock Exchange (LSE: NPSN).

   

    For more information, please visit www.naspers.com.

 

    Disclaimer

    The release, publication or distribution of this announcement in jurisdictions other than South

    Africa may be restricted by law and therefore persons into whose possession this announcement

    may come should inform themselves about, and observe, any such applicable restrictions or

    requirements. Any failure to comply with such restrictions or requirements may constitute a violation

    of the securities laws and regulations of any such jurisdiction. To the fullest extent permitted by

    applicable law, Naspers disclaims any responsibility or liability for the violation of such restrictions

    or requirements by any person. This announcement has been prepared for the purposes of complying

    with the JSE Listings Requirements and the information disclosed may not be the same as that which

    would have been disclosed if this announcement had been prepared in accordance with the laws and

    regulations of any jurisdiction outside of those outlined above.

 

    This announcement does not constitute an offer or form part of any offer or invitation to purchase,

    subscribe for, sell or issue, or a solicitation of any offer to purchase, subscribe for, sell or issue,

    any securities including Unbundled MultiChoice Shares (whether pursuant to this announcement

    or otherwise) in any jurisdiction, including an offer to the public or section of the public in any

    jurisdiction. This announcement does not comprise a prospectus or a prospectus equivalent

    announcement, nor does it constitute an advertisement of an offer as envisaged in the Companies Act.

    This announcement may include forward-looking statements including those about the Naspers Group,

    the MultiChoice Group, their prospects and/or the Unbundling and/or the Listing, which are based

    on current expectations and projections about future events. These statements may include, without

    limitation, any statements preceded by, followed by or including words such as "target", "believe",

    "expect", "aim", "intend", "may", "anticipate", "estimate", "plan", "project", "will", "can have", "likely",

    "should", "would", "could" and other words and terms of similar meaning or the negative thereof.

    These forward-looking statements are subject to risks, uncertainties and assumptions including about

    the Naspers Group, the MultiChoice Group, the Unbundling and the Listing. In light of these risks,

    uncertainties and assumptions, the events in the forward-looking statements may not occur or occur

    in the manner suggested by the forward-looking statement. No representation or warranty is made

    that any forward-looking statement will come to pass and, in particular, no representation or warranty

    is made that the Unbundling or the Listing will be implemented (either wholly or in part). No one

    undertakes to publicly update or revise any such forward-looking statement. The information contained

    in this announcement is provided as at the date of this announcement and is subject to change without

    notice. Naspers and the MultiChoice Group expressly disclaims any obligation or undertaking to

    disseminate any updates or revisions to any forward-looking statements contained herein to reflect any

    change in its expectations with regard thereto or any change in events, conditions or circumstances on

    which any of such statements are based.

 

    Cape Town

    21 January 2019

 

Sponsor

INVESTEC SPECIALIST BANK

 

Joint Financial Adviser to Naspers

CITI

 

Joint Financial Adviser to Naspers

MORGAN STANLEY

 

South African legal adviser to Naspers and the Company

WEBBER WENTZEL

 

WWW.NASPERS.COM


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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