The independent board of JSE-listed MultiChoice has advised shareholders to consider accepting a takeover bid from Canal+, a French media conglomerate. Despite this endorsement, both entities face substantial regulatory obstacles before the deal can be finalised.
Canal+ and MultiChoice issued today a Combined Circular to MultiChoice Shareholders regarding the mandatory offer by Canal+ to acquire the MultiChoice shares it does not own for a consideration of R125.00 per share.
“The offer from CANAL+ is an endorsement of MultiChoice’s 40-year track record and our compelling continental growth strategy. It is gratifying to note that foreign investors share our view that South Africa and Africa remain attractive growth markets,” Elias Masilela, Chairman, MultiChoice Group, said.
While we are currently successfully delivering on our mandate and strategy, CANAL+’s offer provides the opportunity to accelerate these plans and form a global entertainment business with Africa at its heart, increasing value for shareholders in the process.”
The offer consideration of R125 per share represents a 66.66% premium compared to the MultiChoice share price (last closing price) on the last trading day prior to the delivery of the NBIO and a 63.96% premium compared to the 30 Day VWAP prior to the NBIO.
Canal+ is of the view that the substantial premium recognises the potential benefits that may be realised by combining Canal+ and MultiChoice.
“The publication of the Combined Circular is a step forward in our vision to create a global entertainment business with Africa at its heart. It includes a recommendation by the Independent Board of MultiChoice that our offer should be accepted by shareholders in the event it becomes unconditional, and an assessment that our offer is both fair and reasonable,” Maxime Saada, Chairman and CEO, CANAL+ Group said.
“By combining the scale, complementary geographies and content portfolios of our two companies we will create an entertainment group with international reach and strong local roots. Our aspiration is to provide viewers across the continent with a local champion that can both challenge and partner with the largest media companies in the world and which can serve powerful local stories and compelling sport, whilst investing in the local creative and sporting ecosystems to ensure their long-term success.”
Canal+ intends that, should its European listing proceed, there will be an opportunity for South African investors to become shareholders of the combined entity as part of a secondary inward listing on the JSE.
Regulatory hurdle
South Africa has strict foreign ownership restrictions on broadcasters.
However, the specifics of their strategy to address this restriction, outlined in the Electronic Communications Act, remain unclear. This regulation prohibits foreign entities from controlling more than 20% of the voting rights of a South African broadcaster.
MultiChoice is currently evaluating and refining various structuring options and potential transactions. Yet, the constraint posed by the ECA stand as a significant obstacle in the path towards finalising the deal between the two companies.
“Canal+ and MultiChoice are respectful of all applicable laws and regulations relating to the sectors in which they operate. Certain entities within the MultiChoice Group are subject to the applicable laws in the electronic communications sector in which MultiChoice operates that have foreign control restrictions. These include section 64 of the ECA, which places certain restrictions on foreign entities (such as Canal+) in respect of commercial broadcasting licensees,” the two firms said in the joint circular.
“In light of the duty on Canal+ to make a mandatory offer for the MultiChoice shares, Canal+ and MultiChoice are in the process of assessing and finalising suitable structuring options and potential transactions, which may be undertaken by the MultiChoice Group on or shortly before the closing date to ensure compliance with the applicable limitations on foreign control while also maintaining MultiChoice’s broad-based black economic empowerment credentials.”
