The tax implications of corporate deals are normally not the most important thing. But because Naspers is such a huge company in SA terms, anything it does has massive implications. The decision to hive off a big chunk of the company, to be called Prosus, on to the Amsterdam stock exchange leaves shareholders with a tax dilemma.
The reason is that electing to take up shares in Prosus will trigger a capital gain. Alternatively, electing to take up further Naspers shares avoids triggering a capital gain, but investors may find this vehicle trades at a larger discount than it did before. Well, that’s great for them. But shareholders are going to be paying this, so they need to make a tough decision.
The Prosus option is the default option. This means that investors who do not take any action will automatically take up a direct holding in Prosus. Gresty says there are arguments that Naspers may trade at a larger discount to its net assets than it did before, partly because moving 27% of Naspers’s market capitalisation into Prosus will not reduce Naspers’s size in the SA market by enough to prevent its weight in the local index exceeding most investors’ single stock exposure limits.
Source: News Formal (newsformal.com)
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