Canal+ has announced that it submitted a non-binding indicative offer to acquire South African pay-TV giant MultiChoice for about $1.7 billion.
In a statement on Thursday, Canal+ said it sent a letter to MultiChoice’s board containing a non-binding indicative offer to acquire all of the issued ordinary shares of MultiChoice it does not already own, subject to obtaining the necessary regulatory approvals.
It has offered $5.63 per ordinary share, representing a premium of 40% to MultiChoice’s closing share price of $4 on 31 January 2024.
In its last annual report, MultiChoice revealed that Canal+ owned 140,160,277 of its 442,512,678 issued shares.
Buying out the remainder would cost Canal+ close to $1.7 billion.
Canal+ conducted a creeping takeover of MultiChoice over the past four years.
This strategy saw the company steadily buying up MultiChoice shares on the open market until it held over 30% of the company.
However, this raised concerns that Canal+ violated South Africa’s Electronic Communications Act.
MultiChoice dismissed these concerns, saying its memorandum of incorporation limits foreigners’ voting rights to 20%, in line with the Act.
Canal+ said that its acquisition would transform MultiChoice into a global-scale media company.
It also warned that MultiChoice’s lack of scale would become an “acute problem” if a deal like this didn’t happen.
“Upon the satisfactory completion of a confirmatory due diligence, Canal+ intends to deliver a firm intention letter to the Independent Board,” it stated.
“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+ said it was respectful and observant of all laws and regulations relating to the South African media sector and companies listed on the Johannesburg Stock Exchange.
“Any firm intention letter submitted would be mindful of the obligations that Canal+ would have in this regard.”
Canal+ also said it 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 stated.
“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 stated.
“However, the media industry in which MultiChoice is operating is becoming increasingly globalised and competitive, with regional media companies having to compete with the firepower of global media titans, with enormous resources to invest in content, marketing and technology.”
Canal+ said scale was the only way to survive and thrive in this environment.
“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 said.
“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.”
Canal+ gave assurances of its commitment to South Africa’s creative industry, local sports, and B-BBEE.
“We recognise that the economic transformation of South Africa is an imperative,” it said.
“We are fully committed to the combined group being ‘best-in-class’ in terms of B-BBEE and participation of historically disadvantaged groups, and acknowledge the key role played by Phuthuma Nathi in this regard.”
Canal+ chairman and CEO Maxime Saada said they are a long-term investor in both MultiChoice and South Africa and are proud to have been actively involved in Africa’s media sector for 30 years.
“For MultiChoice to continue to thrive in Africa it will require a strategy that enhances its scale as well as strengthened local and global expertise,” Saada said.
“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.”
Saada said that as a committed investor and an experienced global media company, they want to ensure that MultiChoice and the broader South African creative ecosystem can succeed in the long term.
“We hope to build on our strong track record of cooperating with MultiChoice to commission ambitious and authentic African content, support more local production companies and deepen access to international sport while investing in and promoting local sport and their local stars and ambassadors,” he said.
“We believe that with greater scale, as part of a combined group with Canal+, MultiChoice would enhance its ability to navigate the structural challenges facing the media sector, creating and securing jobs, and providing a platform for the continued success of MultiChoice as Africa’s leading media company.”