Vivendi’s Canal Plus offers to buy rest of South Africa’s MultiChoice

Vivendi’s opens new tab Canal Plus has offered to buy all the shares it does not own in South Africa’s MultiChoice Group opens new tab for roughly $1.7 billion to strengthen its hand in a competitive international pay TV market.

Canal Plus, the top shareholder in MultiChoice with a 31.67% stake according to LSEG data, said it would likely pay 105 rand in cash per share, a 40% premium to MultiChoice’s closing share price on Wednesday.

Shares in MultiChoice surged in Thursday trade but remained below the offer price. They were last up 24.83% at 93 rand.

Canal Plus said its offer, worth 31.7 billion rand according to Reuters calculations, was non-binding and indicative but that it expected to deliver a letter of firm intention to MultiChoice’s board once due diligence has been completed.

MultiChoice, which operates in 50 countries in sub-Saharan Africa, said it had received a letter from the French media company and would update shareholders on any developments.

Michael Steere, equity research analyst at Avior Capital Markets, said while a merger offered benefits of scale, the proposed price “materially undervalues the group”.

Investing in local content
“For MultiChoice to continue to thrive in Africa it will require a strategy that enhances its scale as well as strengthened local and global expertise. Our potential offer, if successful, would be an important next step for MultiChoice to realise its full potential,” Maxime Saada, chairman and CEO of Canal Plus, said in a statement.

MultiChoice has over the years invested billions of rand to fight off competition from international streaming giants such as Netflix opens new tab, Amazon opens new tab and Disney  opens new tab. Netflix, for example, has also been investing in local content.

Saada added the deal would give MultiChoice the resources to invest more in African talent and stories.

As part of MultiChoice’s efforts to fight off competition, it partnered last year with Comcast’s opens new tab NBCUniversal and Sky to revamp MultiChoice’s Showmax streaming service, which now offers live Premier League soccer matches.

Canal Plus also said it was planning a stock market listing following proposals by parent company Vivendi to split into four entities, including ultimately a listing in South Africa.

This could potentially help Canal Plus overcome regulatory hurdles that include a law that restricts foreign companies from holding more than 20% of the voting rights of a South African broadcaster, Steere said.

Canal said it respected and observed all laws and regulations relating to South Africa’s media sector and listed companies, and any firm offer would be mindful of this. Reuters