Three weeks following reinstatement, Imtiaz Patel resigns as Chairman of MultiChoice

The broadcasting giant MultiChoice Group, based in South Africa, has made a crucial change to its leadership team with the immediate stepping down of its Chairman, Imtiaz Patel. This decision is understood to be a response to concerns raised regarding the company’s adherence to corporate governance standards.

Despite an earlier statement on April 2, 2024, which confirmed that Patel would retain his position until the culmination of the acquisition process by French media conglomerate Canal+, there has been a shift from the initial plan disclosed in September 2023. Originally, it was communicated that Patel would vacate his role as Chairman effective April 1, 2024.

In accordance with the new arrangement, Elias Masilela, previously appointed as the Deputy Chairman of MultiChoice’s board, will assume the role of Chairman. Although Patel is stepping down from the chairmanship, he is set to continue his association with the group in a consultancy capacity through to October 2028, as outlined in the announcement from September 2023.

Patel’s earlier reinstatement was to ensure leadership stability until the successful completion of the Canal+ transaction. However, with significant milestones now reached, Patel’s continued presence in his former capacity is no longer deemed necessary.

The board declared that negotiations with Canal+ had advanced, reaching pivotal stages that included the signing of a cooperation agreement on April 7, followed by the issuance of a formal intention to transact on April 8.

As the partnership between MultiChoice and Canal+ transitions to a new stage with these noteworthy developments, both the board and Patel concur that the time is appropriate for Masilela to step into the chairmanship role as previously scheduled. The board has confirmed that Patel has relinquished his board membership effective from the date of the latest announcement, ushering in a new era of leadership for the company.

Canal+, the French media giant, has been actively bolstering its ownership stake in the South African broadcasting company MultiChoice Group. The company’s stake has recently increased to over 35%, followed by a further increment to 40.01% and then to 40.8%, signaling a strong intent to secure a significant share of the South African media firm.

These strategic acquisitions come at a time when regulatory constraints pose potential limitations. Current regulations stipulate that a maximum of 29% of the voting rights in broadcasting companies can be held by any entity, with a more stringent cap of 20% applicable to foreign entities. Moreover, surpassing a 35% stake triggers a mandatory offer to be made for all remaining shares of the company.

Despite these restrictions, Canal+ appears undeterred in its efforts to expand its influence over MultiChoice. The company seems to be taking advantage of the current market conditions by acquiring shares at a discount while they are still traded on the open market.

Under the South African regulatory framework, Canal+ is permitted to continue purchasing shares at a price that remains below the mandatory offer threshold, which is set at R125 (approximately $6.56). This provision allows Canal+ to progressively increase its stake in MultiChoice without immediately triggering the obligation to make a buy-out offer for all outstanding shares, thereby possibly consolidating its control over the company before any potential mandatory offer stage.