Meyersdal Eco Estate in the south of Johannesburg is an impressive private residential area, comprising posh houses, apartments, complexes, farms, open land with roaming animals, and walking and cycling trails.
For a visitor like me, it was awesome, fit for the well-heeled and discerning, those who insist on only the best.
It was Monday when I visited my friend there, Bukhosi, who was turning 40. He wanted to share details of his birthday celebration, which he said was themed in his name, which translates as “one of royalty and a prince hood”. Bukhosi is, by any measure, a successful young man, originally from Newcastle in northern KwaZulu-Natal.
The opulence was obvious. Upon my arrival at his luxurious house, Bukhosi presented me with a bottle of Glenfiddich 30-year-old Suspended Time Re-Imagined. I made a mental note about its cost, which was worth a good chunk of my son’s annual school fees.
While I was opening the bottle, Bukhosi started fiddling with his Rotel sound system. He played a hit song by the late Kwaito star Tokollo “Magesh” Tshabalala, titled Ndlovu Iyangena, which loosely translates as “making an unapologetic grand entrance”.
“Does the classical song fit this blessed day?” I asked.
He replied, “Gugu, I read your coverage of the proposed deal between MultiChoice and Canal+.”
He paused and I kept quiet to give him a chance to finish his train of thought.
“You see, Gugu, Canal+ came to SA to make an outrageous, powerful entrance on the JSE and surprise everyone who knew that the laws in SA prohibit foreign ownership of local broadcasters,” he said, before adding: “They bought MultiChoice shares without restraint.”
The French broadcasting group started by buying a 6.5% stake in MultiChoice at the beginning of October 2020, and it now owns 40.83%. Despite a mandatory offer of R125 a share to buy out minorities in the owner of DStv, Africa’s largest pay-TV provider, Canal+ continues to buy shares.
It has since made a full takeover bid that seems likely to succeed.
Bukhosi didn’t hide his disdain for the industry regulator, the Independent Communications Authority of SA (Icasa), saying that “careerist regulators” with an eye for a job at Canal+ could pass the deal.
“This French company is what we might even call “okhanda limtshela okwakhe” (those who flout authorities, local laws, and regulations without fear of consequences),” he suggested.
The French company has made its mandatory minority takeover offer, dangling carrots at shareholders with a large number of shares or a free float that is below the mandatory offer. These shareholders probably believe that if they don’t accept the Canal+ offer, the MultiChoice stock could depreciate to below R70 if the deal falls through.
However, if the large institutional shareholders, who own 29.46% of MultiChoice, don’t accept the offer and instead seek a price closer to MultiChoice’s net asset value — R181 a share — finalising a deal could prove very difficult for Canal+.
“If this is the case, I believe Canal+ will have a hard time convincing the country’s Competition Commission to approve the deal,” I said to reassure Bukhosi. “The share price of MultiChoice shows the big institutional investors aren’t in favour of this deal. MultiChoice’s share price has been trading between R115 and R119 since April 9, which indicates to me that large investors such as the PIC aren’t convinced about the mandatory offer.”
Just over a year ago, on March 6 2023, MultiChoice shares rocketed to R147 when Africa’s largest pay-TV operator announced a partnership with Comcast, the US-based telecom and media conglomerate that led to the relaunch of MultiChoice’s Showmax.
I might be wrong but Comcast appeared to have been the chosen partner for MultiChoice before Canal+ a “Ndlovu Iyangena” or “okhanda limtshela okwakhe” decided to subvert the deal.
“Canal+ won’t buy additional shares after making a mandatory offer to the minorities,” I said. “This behaviour suggests this deal isn’t friendly. “Perhaps it’s because the MultiChoice board is compromised, as there are some who want the deal to go through no matter what because they could get a javelin throw on the other side if the transaction succeeds.”
For now, Canal+ is determined to acquire MultiChoice by buying more shares on the open market, rendering Icasa and the takeover regulations panel irrelevant. It is is inching towards 51% control of MultiChoice while overriding the laws that prevent them from doing so.
Bukhosi listened intently.
“I have come to believe that the courtship of MultiChoice has been full of nefarious tricks and has rendered the country’s broadcasting laws useless,” I said. “Either way, it appears that Canal+ will increase its stake in MultiChoice to above 51% and relinquish control of the free market.”
We had hardly touched the bottle.
“My point is that Canal+ could be a strategic bully that wants to intimidate us when it comes to creating content that defines Africa’s identity,” Bukhosi said before we had drained the whisky.
I explained that, right now, the future of MultChoice is in the hands of shareholders who own 29% of the company on the open market. Furthermore, their chosen board chair, Imtiaz Patel, resigned this week “with immediate effect”.
I explained to Bukhosi the sudden resignation meant there was likely to be a new boardroom game, under Elias Masilela. Get ready for a Patrice Motsepe factor.
• Lourie is founder and editor of TechFinancials.
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