Will Canal+ Offer for MultiChoice Pass Regulatory Requirements?

Canal+’s offer for MultiChoice is set to be wrought with regulatory hurdles as the French broadcaster officially announces takeover intentions.

French broadcaster Canal+ has officially made an offer to purchase outstanding shares in pan-African broadcaster MultiChoice. Canal+ has offered R105 per share which is a 40% premium of MultiChoice’s share price by market close on 31 January 2024. However, this deal looks set to face several regulatory hurdles.

In December, Canal+’s parent company Vivendi Group announced plans to unbundle Canal+ and list the broadcaster separately. Canal+’s holdings comprise broadcasting platforms Dailymotion and GVA, Hong Kong-based OTT service Viu International, Scandinavian streaming platform Viaplay, as well as MultiChoice. According to analysts , a complete acquisition would find it hard to pass South Africa’s regulatory requirements.

“It would be unlikely that we would see a complete takeover. South African legislation limits the foreign ownership of South African broadcasters to 20%,” said Jimmy Moyaha, an independent financial markets analyst. “This means that the voting rights of Canal+ would always be limited to 20% of the company’s total voting power as per a provision in MultiChoice’s Memorandum of Incorporation.”

However, according to Sherilyn Kamga, a senior strategic finance analyst, this hurdle is not all impossible to see through. Kamga, states that Canal+ could partner up with local players via a holding structure. “[Canal+] could form alliances with local partners who will hold a majority stake in the company. This way, it could exert indirect influence over the management of the company without exceeding the 20% voting rights limit,” said Kamga.

Alternatively, some foreign investors use complex investment structures, such as trusts or holdings, to acquire a significant stake in a South African company while adhering to voting rights limits. This way, it could exert indirect influence over the management of the company without exceeding the 20% voting rights limit. Another option could include selling off or excluding MultiChoice South Africa from the agreement to bypass having to abide by South African law. Canal+ could also decide to not have voting rights in the South African subsidiary.

According to Vanity Fair, Canal+ is also on track to acquire France’s second biggest pay-TV group OCS and its film/TV production/distribution arm Orange Studio, a deal which is currently undergoing regulatory vetting in France. The broadcaster has 25 million subscribers across 50 countries while MultiChoice has 24 million in Africa.

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