Shares in MultiChoice shot up on Wednesday as French broadcaster Canal+ came one step closer to taking ownership of Africa’s largest pay TV group, with competition authorities green lighting the transaction.
On Wednesday, the Competition Commission recommended that the Competition Tribunal approve the proposed acquisition by Canal+ of MultiChoice subject to conditions.
The watchdog said it was of the view that “the proposed transaction is unlikely to substantially lessen or prevent competition in any market”.
The conditions include a package of guaranteed public-interest commitments proposed by the parties.
The package supports the participation of firms controlled by historically disadvantaged persons and small, micro and medium enterprises in the audiovisual industry in SA, MultiChoice said.
Importantly, the two broadcasters have “agreed to a moratorium on retrenchments for a period of three years following the merger implementation date.”
This package will also maintain funding for local general entertainment and sport content, providing local content creators with a strong foundation for future success.
According to the commission, the total value of all the public interest commitments advanced by the merger parties, based on past spend by MultiChoice, was projected to be worth R26bn over the next three years.
The transaction will now be considered by the Competition Tribunal, while regulator the Independent Communication Authority of SA has yet to weigh in publicly on the matter.
MultiChoice shares rose more than 5% on Wednesday morning, trimming some of those gains to trade 4.43% firmer at 1.48pm.
In April last year, Canal+ and MultiChoice entered into a co-operation agreement regarding a proposed mandatory offer. Canal+ had been aggressively buying MultiChoice 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 2024, 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 M&A deal in SA in 2024.
The DStv owner snubbed the offer, even though it was at the top end of the target price range that analysts and brokers had for the stock. Canal+ raised its offer to R125 a share on March 5.
A day later, Canal+’s stake had grown to 35.01%, triggering a mandatory offer, according to rules set by the takeover regulation panel.
“Our decision to extend the long stop date reflects our recognition of the hard work and positive progress achieved by all the parties and stakeholders in working towards securing the necessary clearances for this transformative transaction,” said Maxime Saada, CEO of Canal+.
In March, two companies extended the date to complete the transaction to October from April, citing delays in getting approvals from regulators and competition authorities.
“The timing of this transaction is critical and we will continue working tirelessly to ensure finalisation of the transaction within this time frame to ensures it retains its intended value and impact for all stakeholders.”
Calvo Mawela, group CEO of MultiChoice, said: “The teams continue to make great progress in this transaction. We remain committed to concluding a successful transaction that will create positive value for our customers, our shareholders and all other stakeholders in our ecosystem.”
With Jacqueline Mackenzie
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