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Canal+, MultiChoice Plan to Navigate Ownership Rules


France’s Groupe Canal+ and JSE-listed MultiChoice Group have hinted at strategies to navigate South Africa’s strict foreign ownership restrictions for broadcasters if their proposed acquisition deal proceeds.

The two companies issued a joint circular to shareholders on Tuesday, outlining the terms of the all-cash transaction valued at $6.7 per MultiChoice share.

Despite the announcement, there remains a lack of detailed clarity on how Canal+ and MultiChoice intend to circumvent the restriction in the Electronic Communications Act (ECA), which prohibits foreign entities from holding more than 20% of the voting rights of a South African broadcaster. This ECA provision could pose a significant challenge to the deal’s completion.

“Canal+ and MultiChoice are respectful of all applicable laws and regulations relating to the sectors in which they operate,” the firms stated in the circular. They acknowledged that certain MultiChoice entities are subject to foreign control restrictions under the ECA, specifically section 64.

The companies are currently exploring structuring options and potential transactions to ensure compliance with these restrictions while maintaining MultiChoice’s broad-based black economic empowerment (B-BBEE) credentials. They have given themselves until April next year to finalize the offer to MultiChoice shareholders, allowing time to develop a compliant strategy.

The circular hints at potential solutions, including:

  • A corporate reorganization of the MultiChoice Group.
  • Participation by local B-BBEE partners.
  • Mechanisms to limit the voting rights of foreign entities or to limit MultiChoice’s voting rights over its licensed entities.

Further details on these strategies will be provided as soon as they are finalized.

Meanwhile, an independent board has reviewed the valuations from an independent expert’s report and concluded that Canal+’s offer of $6.7 per share is fair and reasonable for MultiChoice shareholders. The board has recommended the offer, should it become unconditional.

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