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Africa’s biggest pay-TV operator, MultiChoice, has recommended that shareholders accept a buyout offer from French streaming service Canal+ in a deal that values ​​the company at $2.9 billion.
The Johannesburg-listed group’s independent board said on Tuesday that “the terms and conditions of the offer are fair and reasonable for MultiChoice shareholders”, citing a valuation report from Standard Bank that gave the company a likely value of R120 ($6.4). to the action.
The R125-per-share offer from Canal+, which is owned by media group Vivendi and already owns 45.2 percent of MultiChoice, will not be subject to a shareholder vote but will remain open until April next year.
Canal+ CEO Maxime Saada told reporters that “I would prefer it to happen faster, not because I’m impatient, but because the competition isn’t waiting.” He described the deal as part of a plan to “create a global entertainment business with Africa at its heart.” .
The French company has 26.4 million subscribers worldwide and says it wants to become a “credible alternative” to media companies including Netflix, Disney, Apple TV and YouTube.
MultiChoice reaches 22 million households in Africa through services that include satellite broadcaster DStv and streaming service Showmax, in which Comcast’s NBCUniversal has a 30 percent stake.
Elias Masilela, chairman of MultiChoice, described the deal as a boost to its growth strategy in Africa. “It is heartening that foreign investors share our view that South Africa and Africa remain attractive growth markets,” he said.
Significantly for the South African Stock Exchange, Canal+ is planning a secondary listing of its shares on the JSE once the takeover is agreed, subject to the intended listing in Europe going ahead. Vivendi said in December it was conducting a “feasibility study” for a proposed split of the company into several separately listed entities.
A successful deal would contrast with the recent failure of BHP’s bid for its rival Anglo American, in which BHP sparked controversy over a demand that the two South African arms be separated.
Saada said he had spoken to South African officials and that Canal+ had already made “firm commitments” to the country, including making commitments to create jobs and invest in South Africa’s creative industries. “This is the way we want to do business. We don’t see it as an obstacle,” he said.
These commitments are important because the deal will have to be approved by the country’s antitrust regulator, the Competition Commission, which will also consider the “public interest” of such a deal. In the past, the clause has opened the way for the government to extract concessions from foreign buyers such as Walmart and Anheuser-Busch InBev, including preserving jobs and expanding South African supply chains.
A second and potentially bigger hurdle is South Africa’s Electronic Communications Act, which prohibits foreign entities from holding more than 20 percent of the voting rights of a local broadcast rights holder.
In a circular, the companies said they were “assessing and finalizing appropriate structuring options and potential transactions” to ensure compliance with the rule while ensuring MultiChoice can continue to maintain the minimum level of black shareholding under South Africa’s empowerment rules. Canal+ said it was “fully committed” to ensuring MultiChoice retains its black ownership.