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Africa’s largest 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.
An independent board of the Johannesburg-listed group said on Tuesday that “the terms of the offer are fair and reasonable to MultiChoice shareholders”, citing a Standard Bank valuation report that placed the company at a likely value of R120 ($6.4 ) yielded. per part.
The R125 per share offer by 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 journalists: “I would prefer it to happen faster, not because I am impatient, but because the competition does not wait.” He described the deal as part of a plan to “create a global entertainment company 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 such as Netflix, Disney, Apple TV and YouTube.
MultiChoice reaches 22 million households in Africa through services such as satellite channel 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 confirmation of the growth strategy in Africa. “It is pleasing to see that foreign investors share our view that South Africa and Africa remain attractive growth markets,” he said.
Importantly for the South African stock exchange, Canal+ plans a secondary listing of its shares on the JSE after a takeover has been agreed, provided the intended listing in Europe goes ahead. Vivendi said in December it was conducting a “feasibility study” for the 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 courted controversy for demanding the two South African branches be spun off.
Saada said he had spoken to South African officials and that Canal+ has already made “strong commitments” to the country, including pledges on job creation and investment in South Africa’s creative industries. “This is the way we want to do business. We do not see this as an obstacle,” he says.
These commitments are important because the deal must be approved by the country’s competition authority, the Competition Commission, which will also take into account the “public interest” of such a deal. In the past, this clause has paved the way for the government to obtain concessions from foreign buyers such as Walmart and Anheuser-Busch InBev, including in areas such as preserving jobs and expanding South Africa’s 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 the circular, the companies said they were “assessing and consummating appropriate structuring options and potential transactions” to ensure compliance with that rule, while ensuring MultiChoice could still maintain a minimum level of black equity ownership, under the empowerment rules of South Africa. Canal+ said it was “fully committed” to ensuring MultiChoice retained its black-owned credentials.