On Tuesday, Dutch-listed technology investor Prosus NV (PRX.AS) ended a cross-holding structure with its South African parent Naspers (NPNJn.J), sending both businesses’ stocks up as investors applauded the streamlining.
“They (shareholder) said we don’t like this cross holding, which increases complication. We listened. “We’re basically getting rid of that now,” CEO Bob van Dijk told Reuters in an interview.
Early trade for both businesses rose over 10% after the announcement. Prosus, which owns 26% of Tencent (0700. HK), announced reduced full-year earnings.
In 2021, Prosus issued additional shares to buy a 45.4% stake in Naspers, transferring part of Naspers from Johannesburg to Euronext in Amsterdam.
The transaction reduced the value gap between the two companies and Tencent, a software, gaming, and social media powerhouse.
Naspers’ weight on the Johannesburg Stock Exchange (JSE) also decreased.
The discount did not decrease, leading the company to start a share buyback scheme last year, which was more successful.
The cross-holding intricacy angered Nasper’s minority shareholders.
Van Dijk said the corporation may now buy back shares for “many, many years” without the cross-holding arrangement.
Its cash reserves are $10 billion. “It is a relief that the group is reversing some of the previous convoluted structuring,” said Richard Cheesman, senior investment analyst at asset manager Protea Capital Management.
“It is unfortunate that it has been such a long journey with significant costs along the way,” he continued.
Tencent drove Prosus’ net earnings down to $10 billion from $18.6 billion for the year ending March 31.
Prosus reported a 10% growth in revenue to $5.8 billion and a $617 million trading loss from its primary e-commerce companies.
