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Africa’s largest pay-TV operator, MultiChoice, has recommended that shareholders accept a buyout offer from French streaming service Canal+, in a deal that values the company at $2.9bn.
An independent board at the Johannesburg-listed group said on Tuesday that “the terms and conditions of the offer are fair and reasonable to MultiChoice shareholders”, citing a valuation report from Standard Bank, which gave the company a likely value of R120 ($6.4) per share.
The R125 per share offer by Canal+, which is owned by media group Vivendi and already owns 45.2 per cent of MultiChoice, will not be subject to a shareholder vote but will remain open until next April.
Canal+ chief executive Maxime Saada described the deal as part of a plan to “create a global entertainment business with Africa at its heart”.
The French company has 26.4mn subscribers globally and says it wants to become a “credible alternative” to media companies including Netflix, Disney, Apple TV and YouTube.
MultiChoice reaches 22mn households in Africa through services that include satellite broadcaster DStv and streaming service Showmax, in which Comcast’s NBCUniversal has a 30 per cent stake.
Elias Masilela, chair of MultiChoice, described the deal as an endorsement of its growth strategy in Africa. “It is gratifying to note that foreign investors share our view that South Africa and Africa remain attractive growth markets,” he said.
Significantly for South Africa’s stock exchange, Canal+ plans a secondary listing of its shares on the JSE after a takeover is agreed, provided that its intended listing in Europe goes ahead. Vivendi said in December it was conducing a “feasibility study” for the proposed split of the company into several separately listed entities.
A successful deal would stand in contrast to the recent failure of BHP’s offer for its rival Anglo American, in which BHP sparked controversy for demanding that the two South African arms be spun-off.
There are hurdles to the deal, however, even if MultiChoice shareholders vote in favour.
First, the deal will probably have to be approved by the country’s antitrust regulator, the Competition Commission, which will also factor in the “public interest” of such a deal. In the past, this clause has opened the way for the government to ring out concessions from foreign buyers such as Walmart and Anheuser-Busch InBev, including on retaining jobs and expanding South African supply chains.
A second and potentially larger hurdle is South Africa’s Electronic Communications Act, which prohibits foreign entities from holding more than 20 per cent of the voting rights of a local broadcasting rights holder.
In the circular, the companies said they were “assessing and finalising suitable structuring options and potential transactions” to ensure compliance with that rule, while ensuring MultiChoice could still retain a minimum level of black shareholding, under South Africa’s empowerment rules. Canal+ said it was “fully committed” to ensuring MultiChoice retained its black ownership credentials.
