French Media Giant Canal+'s Move to Acquire Full Control of MultiChoice Provokes Mandatory Offer Ruling

In a remarkable twist in the media landscape, French conglomerate Canal+ has been ordered by South Africa’s Takeover Regulation Panel (TRP) to make an immediate mandatory offer to buy MultiChoice, the parent company of DStv, after their recent stake acquisition triggered the threshold that necessitates such an action. This development is the latest in a string of events that highlight the intensifying battle for control over one of Africa's leading entertainment providers.

MultiChoice, a prime player in the digital satellite television industry, disclosed to its shareholders on February 5, 2024, that Canal+, an already significant shareholder, further upped its game by raising its stake in the company, pushing its total interest just past the decisive 35% mark to slip in at 35.01%.

South African corporate law mandates that once an entity's shareholding in a company crosses the 35% threshold, an obligatory bid to purchase the remaining shares must be initiated. This rule aims at ensuring fair treatment to all shareholders and preventing covert control over companies without offering other stakeholders the opportunity to exit on equitable terms.

The request by MultiChoice for the TRP to adjudicate ended with the panel ruling on February 27, 2024, that not only had Canal+ tipped the balance, thereby triggering the need for a mandatory offer, but also reprimanded MultiChoice for making public Canal+'s stake exceeding 35% without the TRP's consent. As a result, MultiChoice faces a compliance notice, which it has since been contesting via The Takeover Special Committee.

Canal+'s advance on MultiChoice has been strategic, with a noteworthy voluntary offer of R105 per share launched on February 1, 2024. This proposition, succumbed to rejection by MultiChoice, valued the company at a 40% mark-up compared to the closing share price on January 31, 2024. With Canal+ using a 'creeping takeover' approach over the last 30 months, they stealthily grew their share from an initial 6.5% to just below the mandatory threshold, enabling them to avoid the need for a premium over market value for their increased investment.

This creeping strategy, however, has reached its endgame now that the 35% marker has been exceeded. It's a chess move that finds Canal+ in potentially challenging terrain, as the ambitions of this French giant to fully take over MultiChoice will likely collide with S.A.'s Electronic Communications Act. This regulation severely limits foreign control of commercial broadcasting services, entrenching ownership restrictions that are mirrored in MultiChoice's Memorandum of Incorporation, capping foreign voting rights at 20%.

While Canal+ might navigate within these limitations to some extent, a complete acquisition is an entirely different saga that would confront numerous regulatory obstacles. What unfolds next is yet to be seen, but one thing is certain: the dynamics between these media powerhouses bear significant implications for South Africa's broadcasting landscape and shareholders alike.