French media giant Canal+ seems to have found a way around regulations that limit foreign ownership of MultiChoice.
SA restricts foreign ownership of local broadcasters and limits voting rights to 20%. Could it be that BEE is a solution to get over the final hurdle in the French media company’s quest to conclude the acquisition?
Apart from the ownership limit issue, the acquisition seems to be a foregone conclusion.
Maxime Saada, chair and CEO of Canal+, said in a conference call with the media on Tuesday that it had already invested almost €1.2bn in the purchase of a 45.2% stake in MultiChoice.
This stake cannot be cancelled by the regulatory authorities, but they can attach certain conditions to the deal.
The companies said in a joint statement on Tuesday that an independent board formed by Africa’s largest pay-TV operator had recommended the French media group’s mandatory cash offer for the shares it does not already own. The independent board concluded that the terms and conditions of the offer are “fair and reasonable” for MultiChoice shareholders.
Canal+ made a binding offer of R125 in cash per MultiChoice share in April.
Elias Masilela, recently appointed chair of MultiChoice, sees the Canal+ offer as an endorsement of MultiChoice’s 40-year track record and the company’s compelling continental growth strategy.
“It is gratifying to note that foreign investors share our view that SA and Africa remain attractive growth markets,” Masilela said. “While we are currently successfully delivering on our mandate and strategy, Canal+’s offer provides the opportunity to accelerate these plans and form a global entertainment business with Africa at its heart, increasing value for shareholders in the process.”
Both parties are reviewing and determining an appropriate structure for MultiChoice’s licensed operations to ensure compliance with foreign control restrictions when implementing the mandatory offer.
The acquisition would create a pan-African TV broadcaster with about 31.5-million subscribers in more than 50 countries, capable of presenting African content to a global audience. The aim is to compete with Netflix, Amazon Prime and other video-on-demand providers.
“I don’t see the BEE as a hurdle,” Saada said, adding that “the foreign ownership is a hurdle”.
However, he said Canal+ had attracted a lot of interest from potential BEE partners, though it was too early to give details because the deal must first be approved by the regulator. “I would rather it happens fast. Not because I’m impatient, but because the competition doesn’t wait.”
Canal+ also plans to have the new company based in Europe and Johannesburg between year-end and the first half of 2025.
Major hurdle
Could it be that Canal+ sees SA’s unsettled political situation created by a hung parliament as an opportune moment to convince MultiChoice shareholders, including the Public Investment Corporation, to vote in favour of the mandatory offer? If that is so, then the French are being opportunistic and are trying to seize the moment.
The ANC’s dramatic loss of support to 40% of the vote in the election provides enough “chaos” to obscure critical scrutiny of the Canal+ acquisition of MultiChoice.
One thing that will suffer from this coalition is BEE. Listening to Saada one gets the impression that Canal+ is relying on BEE partners to persuade the regulators to see the deal as favourable to SA. We all know that Patrice Motsepe is being touted as a potential BEE partner for Canal+ and may invite other partners to make the deal more attractive to the regulators.
When asked why Canal+ was not disclosing its solution to SA’s regulatory requirements, Saada reiterated his original statement that the company had a strategy to deal with this issue. He refused to disclose the solution, even though Canal+ is the only bidder for MultiChoice.
One wonders why it is kept secret by Saada if it is not controversial. In my opinion, the solution will unsettle the regulators, but they will be forced to decide when it is presented to them by both Canal+ and MultiChoice.
I hope that the BEE partners, who are taking refuge in the comfort of the French bedsheets, know exactly who they are dealing with. As a poorly paid columnist, I am not comfortable with the French owning MultiChoice. They aim to acquire the company cheaply despite years of value creation.
However, my pen has failed, and I cannot stop a conglomerate like Canal+ from buying MultiChoice.
It remains to be seen if it will keep its promise to continue investing in local content such as sports, films, reality shows and documentaries — hopefully told from the perspective of an African child.
Saada says that the deal is a credible opportunity for SA and the rest of Africa. One can only hope the regulators see it that way too.
• Lourie is founder and editor of TechFinancials.
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.