Groupe Canal+ expands ownership in MultiChoice to 40.83%

The French broadcasting giant Groupe Canal+ has recently expanded its stake in South African pay-TV behemoth MultiChoice by purchasing an additional 3,653,492 shares. As a result of this acquisition, Groupe Canal+ now holds a commanding 40.83% interest in MultiChoice. This latest increase in ownership took place over the course of six days, from April 12th to April 17th, during which the shares were acquired at prices ranging between R115.95 and R117.50 each.

In accordance with regulatory requirements, Groupe Canal+ has reported this share purchase to the Takeover Regulation Panel (TRP), in line with the obligations set forth in the Companies Act. Furthermore, the company issued a statement to the shareholders of MultiChoice, in which it indicated that, subject to any restrictions under the Companies Act and Takeover Regulations, it may consider acquiring additional shares in MultiChoice even after the date of the announcement.

This notification from Canal+ came just one week after MultiChoice themselves revealed that the French media powerhouse had surpassed the 40% threshold of ownership. This development prompted certain MultiChoice shareholders to inquire whether Canal+ intends to exceed a 50% stake, which would effectively result in a majority ownership. In response, MultiChoice has articulated that such an outcome is improbable, as obtaining more than a 50% share would constitute a merger situation as per the Competition Act, necessitating prior consent from the Competition Tribunal.

Furthermore, MultiChoice outlined a stipulation that should Groupe Canal+ wish to acquire shares at a price exceeding R125 each, they would be then compelled to proportionally increase their offer price for the additional shares.

The gradual acquisition of MultiChoice by Canal+, often referred to as a ‘creeping takeover,’ has been in progress since 2020. Attention was drawn to this growing investment when it first exceeded the 20% mark, raising questions about potential conflicts with the Electronic Communications Act (ECA) of South Africa.

The Act 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 has addressed the issues regarding compliance with the South African Electronic Communications Act (ECA), which were raised in light of Groupe Canal+’s increasing ownership. The company clarified that it has taken measures to remain aligned with the ECA’s stipulations. These measures are encapsulated within the company’s memorandum of incorporation, which contains specific provisions to prevent any breaches of the ECA.

A key restriction set forth in the memorandum is the limitation of collective voting rights for foreign investors; these are capped at 20%. This effectively means that, despite the percentage of ownership that foreign entities like Groupe Canal+ might accumulate in MultiChoice, their aggregate voting power is restricted, safeguarding the company’s compliance with the ECA. Through this structured approach, MultiChoice ensures that even if foreign ownership stakes increase, the control exerted through voting rights remains within the legal framework mandated by South African law.