DStv owner MultiChoice has informed shareholders that it has constituted an independent board to investigate Groupe Canal+’s offer to buy the company’s remaining shares for 35 billion rand ($1.9 billion).
MultiChoice announced on Monday that it has recruited Standard Bank as an independent expert to assess the terms of the offer by South African acquisition legislation.
It also published the names of independent boards that would provide an opinion on the offer and suggest whether MultiChoice shareholders would accept or reject it. “Any such acquisitions will be reported to the Takeover Regulation Panel and announced to MultiChoice shareholders,” according to the press release.
The board comprises multi-choice directors Deborah Klein, Dr Fatai Sanusi, Louisa Stephens, and Andrea Zappia. Klein also serves as a non-executive director for Nationwide Building Society in the United Kingdom, XYON Health in Canada, and The Guardian.
Sanusi is a senior consultant in the UK National Health Service, having held the position at West Hertfordshire NHS Trust for 21 years. Stevens is a non-executive director of the Institute of Directors in Southern Africa, Strate, and Netcare.
Zappia is the chairman of Showmax and MCH Group and serves on the boards of EssilorLuxottica and MultiChoice. This morning, French media conglomerate Vivendi’s Canal+ made an all-cash obligatory bid to acquire all of the shares of South African broadcaster MultiChoice.
That offer of 125 rands per share comes after Canal+ made an initial offer of 105 rands in February, which MultiChoice rejected as drastically undervaluing the company. The deal valued MultiChoice at approximately R55 billion.
Canal+, MultiChoice’s largest shareholder, prompted the need to make the required offer when it raised its stake in the company above the 35% threshold. Reuters reports that the new bid values MultiChoice at over 55 billion rand. This morning, MultiChoice shares increased by 3.7% to 116 rand.
If the purchase is approved, Canal+ can construct a pan-African broadcasting behemoth with around 31.5 million subscribers in over 50 countries.
Canal+ believes that the competitive landscape for Africa’s media and entertainment industries will alter even more dramatically as the continent quickly adopts broadband and mobile internet. Smartphone adoption is also increasing.
“A combined group would be better positioned to address key structural challenges and opportunities resulting from the progressive digitalisation and globalisation of the media and entertainment sector,” the companies said in a joint statement.
Analysts also predict that the developing media platform will expose African material to global viewers, allowing them to compete internationally.
The French media business has a broad reach in French-speaking African countries. Still, MultiChoice has a more significant presence in English-speaking countries such as South Africa, Nigeria, and Kenya.
For the acquisition to be successful, the French broadcaster must pass the country’s demanding Black economic ownership criteria and South Africa’s Electronic Communications Act (ECA) restrictions on foreign media ownership, limiting voting rights to 20%.
The companies stated that they aim to comply with all applicable regulations and would give additional information. MultiChoice disputed these concerns, stating that compliance with the ECA is assured by restrictions in its memorandum of incorporation, which limit foreigners’ collective voting rights to 20%.
