MultiChoice announced that Canal+ had made an offer to purchase all of MultiChoice’s issued shares that it does not currently own. This transaction could result in Canal+ being listed on the JSE. Operating in over 50 countries, MultiChoice is facing declining revenues due to fierce competition.
The largest stakeholder in MultiChoice, Canal+, currently owns 31.7% of the company. It intended to make a cash offer to MultiChoice shareholders per share of R105, which would have been 40% more than MultiChoice’s January 31, 2024, closing share price of R75. The share reached a high of R95.
“At this stage, there can be no certainty about the progression of the potential offer, nor the terms of any transaction that may occur,” the parties were careful to point out. Commentators on Friday questioned how the acquisition would be structured, given that MultiChoice is restricted by South African broadcasting regulations to only granting voting rights to foreign shareholders on 20% of its shares.
Regarding the South African media industry and companies that are listed on the Johannesburg Stock Exchange, Canal+ respects and complies with all applicable rules and regulations. The corporation stated in a statement that “any intention letter submitted would be mindful of the obligations that Canal+ would have in this regard.”
After parent firm Vivendi announced last month that it was unbundling, Canal+ is getting ready to float.
Canal+ aims to establish an African media enterprise with greater magnitude, capable of prospering in a fiercely competitive global marketplace, providing superior customer service through a world-class array of sports, local, and international content, and guaranteeing that Africa can independently convey her narrative to a worldwide viewership.
For example, The Passive Income Guy (@hazelwood_dave) posted on the X social media platform: “Canal+ offers to acquire MultiChoice for R105. They claim that MCG cannot compete without a larger scale. This is obviously an attempt to persuade authorities to disregard the (20%) foreign ownership cap.
MultiChoice operates in a highly competitive and global field, where local media companies must contend with the financial might of multinational media conglomerates that possess vast resources for content creation, marketing, and technology. The only way to live and prosper in this environment is to scale.
The businesses said on Friday that they together would form a group that would be quite large. The result would be a combined organisation that could invest even more in regional sports and entertainment, provide a technology platform that would be owned by the combined business, and expand MultiChoice’s reach geographically.
The firms stated that if the purchase fell through, MultiChoice’s lack of scale would probably become a more serious issue in the upcoming years, endangering the company’s position as the leading media company in Africa and its mid-term trajectory.
According to a PwC analysis from November, the rise of streaming services has put pressure on traditional TV services, as many customers are now choosing to forgo them in favour of services that offer a wealth of on-demand video content. It is anticipated that South Africa’s media and entertainment sectors will grow faster than those of other countries.
The fierce rivalry between foreign streaming services, such as Disney+, Netflix, Showmax, and Paramount, is driving growth in South Africa’s on-demand and streaming industry. According to PwC, this will increase the country’s media and entertainment (M&E) market revenues by 5.5% yearly to R231 billion over the next five years.
“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,” stated CEO and chair Maxime Saada.
If their offer is accepted, he said, it will be a crucial step forward for MultiChoice to reach its full potential. By joining up with Canal+, MultiChoice would have the financial capacity to make investments in local African talent and stories, scalability, and state-of-the-art technology, enabling it to expand throughout Africa and take on the major international streaming media companies.
Investing in and promoting local sport, its stars, and ambassadors while building on their successful history of working with MultiChoice, Saada stated that they hoped to support more local production companies, deepen access to international sport, and commission ambitious and authentic African content.
