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Unbundling of MultiChoice Group Limited Shares to Naspers shareholders and listing of MultiChoice Group Limited
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
Date: 21/01/2019 05:50:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.