Canal+ is frantically trying to figure out a corporate structure for its impeding tie-up with MultiChoice that satisfies local regulators and allows it to have an active role in the running of Africa’s largest pay-TV group.
Canal+, which has so far spent €1.2bn (R24.3bn) buying up shares in the DStv operator, has pitched the transaction as an opportunity to create an African media business powerhouse with operations in key markets on the continent, from SA and Nigeria to Senegal and Cameroon.
Still, the transaction could face regulatory hurdles and resistance from internal stakeholders because SA’s regulations — under the Independent Communications Authority of SA (Icasa) and MultiChoice’s own memorandum of understanding — limit foreign voting rights to 20%.
“We understand the foreign ownership limit. We understand that we have to go through this [regulatory] process, and we will make sure that we abide by all the laws that are required for us to be a very strong investor in Africa,” chair and CEO of Canal+ Maxime Saada said during a media briefing on Tuesday.
MultiChoice and Canal+ published and distributed the combined circular and the salient dates and times relating to the offer by the French media group to acquire MultiChoice.
The combined circular sets out the terms of the offer and the MultiChoice independent board’s opinion on, and recommendation of, the offer.
The offer opens on June 5 and closes at noon on April 25 2025.
The foreign ownership clause is seen as the biggest stumbling block to Canal+’s takeover ambitions.
While Icasa is yet to make a determination, the Takeover Regulation Panel (TRP) has made a call, shedding light on how some are interpreting the legislation.
The TRP instructed Canal+ to issue a mandatory offer, following the argument from the French company that it was not obliged to do so as its 35% ownership (at the time) did not grant it voting rights, hence exempting it from making an offer to other shareholders.
However, the panel said the restriction on voting “does not apply when votes are to be cast on other [non-licensee] matters”. In other words, Canal+ had voting rights up to 35%, in so far as a matter does not have to do with MultiChoice SA, which is the holder of the group’s broadcast licence in the country.
Ultimately, Icasa as the broadcast regulator, will have the final say.
Saada said his company had not yet disclosed its plans to overcome this hurdle because it was still finalising an approach that would be acceptable to authorities.
Regulatory process
“The main part of our job is to go through the regulatory process and to get the approval on our approach from the competition authority, from the TRP ... all the authorities that are involved in this deal. And we know that this will entail strong commitment from the new company locally. We’ve very aware of that.
“We have gone through this process before, including in Europe, and we have committed to doing a number of things to make sure that the value that we will create with this combined entity will benefit all local stakeholders,” he said.
By May 16, Canal+ had increased its holding in MultiChoice to 45.2%.
At the beginning of May, the TRP granted MultiChoice and Canal+ an extension to distribute a combined circular to shareholders outlining details of the bid. The panel requires a combined circular in takeover situations to provide all relevant information and ensure informed decision-making by shareholders.
Canal+ has been aggressively buying up shares for almost four years after it started building its stake with an initial purchase of 6.5% in October 2020.
At the beginning of February, the Paris-based company made an offer to buy the rest of the company at R105 a share, or just more than R31bn, in what would have been the biggest merger & acquisition deal in SA so far in 2024.
In May, Business Day reported that MultiChoice was ploughing more resources into its streaming efforts, updating the online version of its DStv service to include new features that it hoped would entice people to watch more of its programmes.
The group has 22-million customers consuming content of its various platforms: DStv, DStv Stream, GOtv and Showmax.
MultiChoice shares were 1.38% lower at R112.35 on Tuesday, giving the group a market cap of R49.24bn on the JSE.
Update: June 4 2024
This story has been updated with new information.
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