Canal+ acquires over 40% shareholding in MultiChoice, raising merger and regulatory questions

MultiChoice, the parent company of DStv, has issued an update to its shareholders regarding the increased investment by French media conglomerate Groupe Canal+, which has now acquired a 40.01% shareholding. This announcement, made through the Johannesburg Stock Exchange (JSE) news service, addressed speculations about a potential merger. MultiChoice clarified that a stake surpassing 50% would necessitate a merger as per the Competition Act, requiring pre-approval from the Competition Tribunal.

The message from MultiChoice underscored that a share price exceeding R125 by Canal+ would prompt a mandatory increase in its offer price. Following Canal+’s offer last month—triggered by surpassing the 35% shareholding mark as stipulated by South Africa’s Companies Act—MultiChoice has engaged Standard Bank as an independent expert to assess the offer’s terms in alignment with South African takeover protocols.

MultiChoice disclosed the independent board members responsible for advising shareholders on the offer. The board features directors Deborah Klein, Dr. Fatai Sanusi, Louisa Stephens, and Andrea Zappia.

With Canal+ continuing to purchase shares, a noteworthy hike from 35.01% to 36.6% was recorded as of April 5, 2024. Canal+ retains the right to further increase its stake during ongoing negotiations, with MultiChoice committed to reporting any additional stock purchases to the Takeover Regulation Panel and its shareholders. Specifically, should Canal+ buy MultiChoice shares at prices above R125 during the offer period, it would be obligated to revise its offer price accordingly.

Canal+’s gradual ascent in the ranks of MultiChoice ownership, which commenced in 2020, has attracted attention concerning compliance with South Africa’s Electronic Communications Act (ECA) as its shareholding went beyond the 20% mark.

It states that a foreigner may not, whether directly or indirectly:

• Exercise control over a commercial broadcasting licensee; or
• Have a financial interest or an interest either in voting shares or paid-up capital in a commercial broadcasting licensee exceeding 20%.

MultiChoice dismissed these concerns, saying compliance with the ECA is ensured through restrictions in its memorandum of incorporation, where voting rights for foreigners collectively are limited to 20%.