Canal+ Moves to Buy Out MultiChoice

France’s Canal+ Group, which has in recent years been buying up a significant stake in JSE-listed MultiChoice Group on the open market, is now moving to take control of the South African pay-television group — if South African media ownership restrictions allow it.

Canal+ said on Thursday that is expects to offer R105/share for MultiChoice, or a 40% premium to the closing price on 31 January 2024. It already holds 31.7% of MultiChoice’s equity, according to a regulatory filing last year. The indicate offer price would value MultiChoice at about R48-billion.

The French broadcaster said it has submitted a letter to the MultiChoice Group board in which it has made a “non-binding indicative offer to acquire all of the issued ordinary shares of MultiChoice that it does not already own, subject to obtaining the necessary regulatory approvals”.

The move comes as MultiChoice increasingly works with another global broadcasting group, Comcast, which owns NBCUniversal and the UK’s Sky. The two Comcast companies have worked closely with MultiChoice to relaunch Showmax, its streaming video entertainment offering.

Given South African broadcasting rules, which prohibit foreign entities from owning more than 20% of a local broadcaster’s voting rights, it might be difficult for Canal+ to get the deal across the line, assuming MultiChoice is prepared to entertain it.

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“Subject to certain confirmations that Canal+ expects following further engagements with MultiChoice, Canal+ anticipates its offer to be for a cash consideration of R105 per MultiChoice ordinary share, which would represent a premium of 40% to MultiChoice’s closing share price of R75 on 31 January,” Canal+ said in an e-mailed statement issued prior to the market open in Johannesburg on Thursday.

‘Firm Intention Letter’

“Upon the satisfactory completion of a confirmatory due diligence, Canal+ intends to deliver a firm intention letter to the independent board,” it said. “At this stage, there can be no certainty about the progression of the potential offer, nor the terms of any transaction that may occur.

“Canal+ is respectful and observant of all laws and regulations relating to the South African media sector and companies listed on the JSE. Any firm intention letter submitted would be mindful of the obligations that Canal+ would have in this regard.

“Canal+ is actively preparing its listing following the unbundling announcement of its parent company Vivendi. This will allow investors to benefit from the combination of Canal+ and MultiChoice, our ultimate goal being to also obtain a listing in South Africa,” it said.

“It is the ambition of Canal+ to create an African media business with enhanced scale, which can thrive in a competitive international market, better serve its consumers with a world leading offering of sports, local and global content, and ensure that Africa can tell her story to a global audience on her own terms.”

It said an acquisition of MultiChoice would give the South African company “scale”, which it said is the “only way to survive and thrive” in a highly competitive global market.

What will be the impact?

“A combination between Canal+ and MultiChoice would create a group with significant scale, putting MultiChoice on a secure long-term path and enabling the company to thrive. It would create a combined group with the ability to commit even greater investment into local content and sport, the provision of a technology platform owned by the combined company, and which would diversify the geographical footprint of MultiChoice, mitigating localised risks and market volatility.

Should this combination not proceed, this lack of scale is likely to become a more acute problem in the coming years, risking the company’s status as the pre-eminent media company in Africa and impacting its mid-term trajectory.”

In the statement, Canal+ chairman and CEO Maxime Saada said: “Our potential offer, if successful, would be an important next step for MultiChoice to realise its full potential. Combined with Canal+, MultiChoice would have the resources to invest in scale, local African talent and stories, and best in class technology, to allow it to grow in Africa and compete with the global streaming media giants.”

This is a developing story … check back soon for more