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French media company Canal+ has expressed its interest in acquiring South African video entertainment firm MultiChoice.
The official confirmation came as Canal+ submitted a letter to MultiChoice's board of directors, presenting a non-binding indicative offer to purchase all the issued ordinary shares of MultiChoice not currently under its ownership. However, the offer is contingent upon obtaining the requisite regulatory approvals.
According to Canal+, the offer, expected to be a cash consideration of R105 per MultiChoice ordinary share, is subject to specific confirmations that Canal+ anticipates to receive after further engagements with MultiChoice.
This proposed acquisition, if successful, would present a considerable premium of 40% over MultiChoice's closing share price of R75 as of January 31, 2024.
The offer comes as MultiChoice sees dwindling revenues as it faces stiff competition from global players, such as Netflix.
In its financial results for the six months ended 30 September, the company posted group revenue of R28.3 billion, down 1% due to weaker local currencies and consumer pressure.
MultiChoice recently partnered with Comcast’s NBCUniversal and Sky to launch a streaming service targeting the African continent. With this partnership, the firm’s Showmax video streaming offering is looking to take US-based streaming service Netflix head-on.
Under this deal, the new Showmax Group will be 70% owned by MultiChoice and 30% by NBCUniversal. In Nigeria, NBCUniversal will hold an indirect 23.7% stake in the local subsidiary.
Canal+ recently increased its stake in JSE-listed MultiChoice to 31.7% after initially acquiring 6.5% of the company’s total ordinary shares in 2022.
Upon the satisfactory completion of a confirmatory due diligence, Canal+ intends to deliver a firm intention letter to the independent board of MultiChoice, says the French company.
At this stage, it says, there can be no certainty about the progression of the potential offer, nor the terms of any transaction that may occur.
“Canal+ is respectful and observant of all laws and regulations relating to the South African media sector and companies listed on the Johannesburg Stock Exchange. Any firm intention letter submitted would be mindful of the obligations that Canal+ would have in this regard,” it notes.
“Canal+ is actively preparing its listing following the unbundling announcement of its parent company Vivendi. This will allow investors to benefit from the combination of Canal+ and MultiChoice, our ultimate goal being to also obtain a listing in South Africa.
The French firm says it has been a supportive major shareholder in MultiChoice for three years, having grown its investment to become the company’s largest shareholder.
“It is the ambition of Canal+ to create an African media business with enhanced scale, which can thrive in a competitive international market, better serve its consumers with a world-leading offering of sports, local and global content, and ensure Africa can tell her story to a global audience on her own terms.”
Maxime Saada, chairman and CEO of Canal+, says: “Canal+ is a long-term investor in both MultiChoice and South Africa, and is proud to have been actively involved in Africa’s media sector for 30 years.
“For MultiChoice to continue to thrive in Africa, it will require a strategy that enhances its scale, as well as strengthened local and global expertise.
“Our potential offer, if successful, would be an important next step for MultiChoice to realise its full potential. Combined with Canal+, MultiChoice would have the resources to invest in scale, local African talent and stories, and best-in-class technology, to allow it to grow in Africa and compete with the global streaming media giants.
“We are steadfast in our belief that MultiChoice could enjoy a bright future as part of a combined group with Canal+.
“As a committed investor and an experienced global media company, we want to ensure MultiChoice and the broader South African creative ecosystem are able to succeed in the long-term,” comments Saada.
“We hope to build on our strong track record of co-operating with MultiChoice to commission ambitious and authentic African content, support more local production companies and deepen access to international sport, while investing in and promoting local sport and their local stars and ambassadors. In turn, this will give viewers more compelling content and further enable Africa to tell her story to a global audience on her own terms.
“We believe that with greater scale, as part of a combined group with Canal+, MultiChoice would enhance its ability to navigate the structural challenges facing the media sector, creating and securing jobs, and providing a platform for the continued success of MultiChoice as Africa’s leading media company.”
MultiChoice today issued a statement confirming it has received the offer from Canal+.
“Accordingly, shareholders are advised to exercise caution when dealing in the group’s securities until a further announcement is made,” the company says.
