French media company Canal+ has made a non-binding indicative offer to acquire South African pay-TV company MultiChoice for approximately US$1,7 billion.
In a statement, 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 US$5.66 per ordinary share, representing a premium of 40% to MultiChoice’s closing share price of US$4.04 on 31 January 2024.
In its last annual report, MultiChoice revealed that Canal+ owned 140,160,277 of its 442,512,678 issued shares.
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 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.
Canal+ chairman and CEO Maxime Saada said they are a long-term investor in 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 and strengthens local and global expertise,” Saada said.