Multichoice is considering Canal+’s $1.9bn buyout offer

DStv owner, MultiChoice has informed shareholders that it has established an independent board to consider Groupe Canal+’s offer to buy the shares of the company that it does not already own for 35 billion rand ($1.9 billion).

In a statement issued on Monday, MultiChoice revealed that it had appointed Standard Bank as an independent expert to review the terms of the offer as required by South African takeover regulations.

It also announced the names of an independent board, which must provide an opinion on the offer and recommend to MultiChoice shareholders whether to accept or reject it. “Any such acquisitions will be reported to the Takeover Regulation Panel and announced to MultiChoice shareholders,” the statement said.

The board comprises MultiChoice directors Deborah Klein, Dr Fatai Sanusi, Louisa Stephens, and Andrea Zappia. Klein also currently serves as a non-executive director at Nationwide Building Society in the UK, XYON Health in Canada, and The Guardian.

Sanusi is a senior consultant in the UK National Health Service, having served in the position for 21 years at West Hertfordshire NHS Trust. Stevens is a non-executive director at the Institute of Directors in Southern Africa, Strate, and Netcare. Zappia is chairman of Showmax and MCH Group, in addition to serving on the board of EssilorLuxottica and MultiChoice.

French media group Vivendi’s Canal+ made an all-cash mandatory offer this morning to buy all the shares of South African broadcaster MultiChoice. That offer at 125 rand per share follows an indicative offer of 105 rands made by Canal+ in February which MultiChoice rejected as significantly undervaluing the company. The deal valued MultiChoice at around R55 billion

The need to make the mandatory offer was triggered by Canal+, MultiChoice’s biggest shareholder to raise its holding in the firm above the 35% threshold. The new offer values MultiChoice at about 55 billion rand, according to Reuters.

This morning the value of MultiChoice shares went up by 3.7% to become 116 rand.

Read more: Canal+ ordered to make mandatory bid for MultiChoice shares by SA regulators with 35.01% stake

Canal+ aims to build an African media behemoth

If completed, the deal would allow Canal+ to create a pan-African broadcasting powerhouse with about 31.5 million subscribers across over 50 countries. Canal+ said it believes the competitive landscape for Africa’s media and entertainment industry will undergo further profound changes as the continent rapidly adopts broadband and mobile internet. Smartphone adoption is also rising.

“A combined group would be better positioned to address key structural challenges and opportunities resulting from the progressive digitalisation and globalisation of the media and entertainment sector,” both companies said in a statement.

Analysts also believe that the emerging media platform will put African content to global audiences and position them to compete on an international scale.

The French media company has a broad reach in French-speaking African nations, while MultiChoice has a stronger presence in English-speaking countries, including South Africa, Nigeria and Kenya.

Similar: Nigeria may lose N1.8 trn and $342m in tax debt if Multichoice is sold to Canal Plus

Some regulatory concerns

For the deal to be successful, the French broadcaster will need to navigate the country’s stringent Black economic ownership requirements and South Africa’s Electronic Communications Act (ECA) restrictions on foreign media ownership, which caps voting rights at 20%.

The companies said they intend to comply with all applicable laws and will provide further details. MultiChoice dismissed these concerns, saying compliance with the ECA is ensured through restrictions in its memorandum of incorporation, where voting rights for foreigners collectively are limited to 20%.

Maxime Saada, chairman and CEO of Canal+ Group, told Reuters there are workable solutions around that which “of course will require us to have local partners”.