Takeover Regulation Panel expresses disapproval over MultiChoice and Canal+’s acquisition negotiations

French media company Canal+ and MultiChoice have come under scrutiny by the Takeover Regulation Panel for their open discussions regarding a potential acquisition. The panel acknowledged communications from both entities but clarified that it neither endorsed nor approved of the developments.

The panel is maintaining ongoing conversations with the two companies, providing guidance as needed. It assured that the situation is being treated seriously, with investigations being conducted into various elements of the current developments.

According to the panel, “Our investigation and engagement with the parties involved aims to ensure that the panel upholds its overarching duty to retain the market’s integrity and ensure fairness for the holders of MultiChoice’s securities.”

Canal+ declared its intentions to acquire MultiChoice on February 1, 2024. This followed the submission of a non-binding indicative offer of R105 ($5.6) per share, offering a 40% premium on MultiChoice’s closing share price of R75 ($4) on January 31, 2024. This bid puts MultiChoice’s worth at over R46 billion ($2.4 billion), with Canal+ set to pay R32.5 billion ($1.7 billion) in cash for the remaining 64.99% stake it does not currently own.

Canal+’s acquisition offer was met with resistance from MultiChoice, which rejected the bid from the French media company on February 5, 2024, citing that it undervalued the organization. However, MultiChoice did express openness to continuing discussions with any party making proposals that are fairly priced and come with appropriate conditions.

While Canal+ confirmed adherence to all laws and regulations relevant to the South African media industry and companies listed on the Johannesburg Stock Exchange (JSE), MultiChoice declared its commitment to fulfilling its obligations in line with the takeover regulations for formal and binding proposals.

MultiChoice also disclosed that Canal+ had boosted its ownership stake to 35.1%, a move that has initiated conjecture about the activation of a “mandatory offer” under South African Companies Act provisions.

However, MultiChoice expressed concern over this mandatory offer, questioning if Canal+’s public proposition satisfied the requirements set out in the Act.

Under Section 196 of the Companies Act No. 71 of 2008, the Takeover Regulation Panel is recognized as a juristic entity that operates under the oversight of the Minister of Trade, Industry, and Competition.

The panel’s responsibilities encompass preserving the market’s integrity and fairness for regulated companies’ securities holders. It is tasked with preventing actions by a regulated company designed to thwart or defeat an offer. Additionally, it is responsible for empowering securities holders of that particular company to make informed and fair decisions, among other duties.