Whispers in financial circles in the Sandton hub suggest billionaire business mogul Patrice Motsepe is involved in the possible Canal+ takeover of MultiChoice, the owner of DStv, Africa’s largest pay-television operator.
Bloomberg reported that Motsepe was in talks with French media conglomerate Vivendi’s Canal+, via African Rainbow Capital (ARC), to participate in its multibillion-dollar bid for MultiChoice. The agency quoted unnamed sources as saying the involvement of Motsepe in the deal would likely help the French media conglomerate meet South Africa’s strict BEE ownership requirements.
I think this story was put out there to test whether public opinion would accept Motsepe as a partner for the French conglomerate in its bid to take over MultiChoice.
Canal+ has built up a stake of more than 35% in MultiChoice, which triggers a mandatory takeover bid.
However, industry experts have pointed out that the Electronic Communications Act limits foreign ownership of local licensed broadcasters to 20% and flagged this as a potential risk to the deal. MultiChoice’s memorandum of incorporation states that the voting rights of foreign owners are limited to 20%, even if their shareholding exceeds this.
In February, Canal+ CEO and chair Maxime Saada told Business Times that Canal+ had found a solution to meet regulatory requirements. “We have looked at it with a number of experts and are very, very confident that there is a solution,” he was quoted as saying.
“We can’t fully disclose [what it is], but we are confident that the matter can be resolved. We wouldn’t have made the offer if we didn’t believe so.”
It now appears Motsepe’s ARC could be the solution.
The confidence and manoeuvring displayed by Canal+ leave one wondering whether the French media company had an insider at MultiChoice all along.
The confidence and manoeuvring displayed by Canal+ leave one wondering whether the French media company had an insider at MultiChoice all along.
Is it a coincidence that the local pay-TV giant has decided to postpone the appointment of Elias Masilela as group chair until the transaction is finalised?
Masilela was meant to take over as chair at the beginning of April, replacing Imtiaz Patel.
Instead, the MultiChoice board announced on Tuesday that it had reached an agreement with Patel for him to stay on as chair until the conclusion of the transaction.
Was the MultiChoice board trying to pre-empt a potential conflict of interest that could have jeopardised Masilela as chair-designate? He will become deputy chair instead.
Masilela is the chair of Sanlam, a company valued at R150bn — three times the market capitalisation of MultiChoice. He was also CEO of the Public Investment Corp, Africa’s most powerful pension fund with an asset firepower of R2.6-trillion.
In light of the possible Canal+ transaction and suggestions Motsepe’s ARC was joining the French company in its takeover bid, appointing Masilela as deputy chair while extending Patel’s tenure as chair raises eyebrows.
Could it be that the position of chair would be challenging for Masilela as a related party, so it made sense to retain Patel and defer his appointment?
If Motsepe’s ARC joins Vivendi, it would be easy for Masilela, as deputy chair of MultiChoice, to withdraw as a related party in the decision-making process.
So how is Masilela a related party in respect of Motsepe?
Masilela was appointed chair of JSE-listed financial services group Sanlam on June 20 2020, replacing Johan van Zyl, who is now co-CEO of ARC.
ARC is a wholly owned subsidiary of Ubuntu-Botho Investments (UBI), a black-owned and black-controlled company established in 2004 with the original primary purpose of building black-controlled capital by Motsepe. UBI has as its most significant investment an economic stake of about 14% in Sanlam, making it Sanlam’s single largest shareholder.
In 2020, Sanlam acquired a 25% minority stake in ARC FS SubCo, a wholly owned subsidiary of African Rainbow Capital Financial Services (ARC FS), which is owned by Motsepe.
ARC FS SubCo has investments in Alternative Prosperity and other companies. Alternative Prosperity holds a strategic position in both Sanlam and ARC.
Masilela, the chair of Sanlam, is also a nonexecutive director of Alternative Prosperity, which has a stake in Diversifi, a consultancy firm for broad-based BEE and ownership strategies. Alternative Prosperity also holds shares in SolveSA, which provides advice on broad-based BEE scorecards with Qube BEE Solutions.
The solution to the regulatory requirements that Canal+ CEO and chair Saada speaks of regarding the acquisition of MultiChoice could have been devised by Alternative Prosperity’s subsidiaries.
If this is so, it would have been detrimental to Motsepe’s ARC if Masilela had risen to become the chair of MultiChoice.
That said, Alternative Prosperity’s entry may have helped Canal+ sidestep a number of ownership issues.
Masilela and Alternative Prosperity, through Diversifi and SolveSA, may have been well placed to play a greater consultative role in unpacking South Africa’s broadcasting regulations and issues of broad-based BEE.
The delay in Masilela taking more than the chair of MultiChoice may therefore have been influenced by a potential conflict of interest — if it is indeed true that Motsepe is in talks with Canal+ to buy the owner of DStv.
• Lourie is founder and editor of Tech Financials
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