MultiChoice’s block of BEE shareholders under the Phuthuma Nathi scheme appears to be safe if French broadcaster Canal+’s bid to buy the Johannesburg-based pay-TV business proceeds.
Phuthuma’s main asset is its 25% holding of MultiChoice’s SA business, meaning the mandatory offer — which formally began earlier in the week — does not affect them directly, though they would probably prefer things to remain as they are.
The scheme was created in 2006 when MultiChoice was still a wholly owned subsidiary of Naspers, with an initial public offer (IPO) that year and a second in 2007. The shares began trading publicly in December 2011 and now also trade on the Integrated Exchange (I-Ex), formerly known as the Equity Express Securities Exchange.
The French operator is certainly aware that broad-based BEE (BBBEE) is important to how it engages with MultiChoice, saying on February 1, when it made its initial offer, that it recognised “that the economic transformation of SA is an imperative”.
Value
Canal+ CEO Maxime Saada told Business Day that it saw value in keeping Phuthuma when asked this week if the French group had plans to keep the BEE structure in place after the possible acquisition.
The company has its own ideas about implementing a BEE but says it cannot reveal anything until a deal goes through.
“Since what we have in mind has not been approved by regulatory authorities, it’s difficult to be completely clear on this,” Saada said. “What I am clear on is that we intend to keep the level 1 BBBEE status of MultiChoice. This is something that we believe is an asset of MultiChoice.
“We believe in this status ... Phuthuma Nathi is essential. Our intention is definitely to make sure that it is part of the story,” he said.
Outside Phuthuma, there is speculation that SA billionaire Patrice Motsepe may be a joining Canal+’s bid as a BEE partner, an issue that Saada refused to be drawn on.
Part of the rationale for setting up Phuthuma was to fulfil requirements under the broadcast licences issued by the Independent Communications Authority of SA (Icasa) to MultiChoice SA, which requires the company to maintain at least 30% ownership by historically disadvantaged groups.
Phuthuma is said to be one of the most successful BEE schemes, mainly due to the consistent flow of dividends to shareholders. The scheme has 76,961 investors, according to the latest figures from MultiChoice, who have received a combined R17.8bn in dividends from MultiChoice SA.
“The biggest counter on our exchange, Phuthuma trades about 5% of its issued shares every year, which is reasonable,” Anthony Wilmot, founder of I-Ex, recently told Business Day.
The exchange has traditionally specialised in BEE counters, including Motus’ Ukhamba, averaging about R1.5m-R2m a day in Phuthuma shares traded.
MultiChoice Group holds a 5.7% stake in Phuthuma after a share swap in 2019.
On Monday, Canal+ and MultiChoice said they had entered into a co-operation agreement regarding the French broadcaster’s proposed mandatory offer for Africa’s largest pay-TV group.
MultiChoice has granted Canal+ certain customary exclusivity undertaking and constituted its independent board, which has appointed Standard Bank of SA as an independent expert to express a view on the fairness and reasonableness of the terms of the offer.
On Tuesday, Phuthuma shares closed at R94.50, giving the scheme a market cap of just more than R6.615bn.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.