23 May 2019 11:58:15 AM

Naspers unbundles shares

- 2019-01-22 09:43:06 AM

Naspers Limited announced the unbundling of MultiChoice Group Limited shares to Naspers shareholders and listing of MultiChoice Group Limited on the JSE Limited.


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).


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.


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.


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%.

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.