Thursday, February 1, 2024

Vivendi's Canal+ ready for MultiChoice takeover, makes buyout offer for R32 billion: 'Scale is the only way to survive in this environment'.

by Thinus Ferreira

Vivendi SE's Canal+ in France that has already become the biggest shareholder in Africa's largest pay-TV operator as it steadily gobbled up a third of MultiChoice over the past 3 years, is finally ready for its MultiChoice takeover - complete with a plan for its own listing - and has made a non-binding offer of close to R32 billion (US1.7 billion) to buy MultiChoice.

Canal+ that made a since abandoned play in 2017 for MultiChoice's Africa's pay-TV operations excluding South Africa, has now made a non-binding offer to the MultiChoice board, with plans to list Canal+ as its own entity on a stock exchange.

In a statement, Canal+ confirms it has told the MultiChoice board about an offer to acquire MultiChoice at R105 per share, dependent on regulatory approval. 

Canal+ has steadily been upping its shareholding in MultiChoice over the past few years, leading to constant takeover chatter.

The R105 per share in cash buyout for its takeover plan is a 40%-premium on MultiChoice's share price of R75 on 31 January 2024 and means that the Canal+ buyout of the remainder of MultiChoice would cost it an additional  R31.75 billion (U$1.7 billion).

Canal+ which has a footprint in Africa although limited through a gentleman's agreement with MultiChoice to mostly Francophone Africa, has steadily grown its co-production partnership with MultiChoice over the past few years.

It now wants to band together its legacy operations with that of MultiChoice to collectively battle the onslaught of global streamers like Netflix, Amazon Prime Video, Disney+ and Apple TV+ gobbling up subscribers across the continent who are abandoning traditional pay-TV options in favour of digital streaming options.

MultiChoice just rolled out its relaunched Showmax streamer done in partnership with Comcast's NBCUniversal and the United Kingdom's Sky to more effectively battle global streamers and their aggressive foray into Africa.

Canal+ says if it takes over MultiChoice it will "commission ambitious and authentic African content, support more local production companies and deepen access to international sport while investing in and promoting local sport".

This is a very clear, and very intentional dig and carefully constructed statement by Canal+, to signal that it would be different if it were to run MultiChoice, that global streaming players like Amazon Prime Video that has disappointed and shocked the African community with false promises, and streamers like Netflix in Africa that doesn't offer and can't replicate the broad pay-TV broadcasting and commissioning spectrum that MultiChoice does.

"It is the ambition of Canal+ to create an African media business with enhanced scale, which can thrive in a competitive international market, better serve its consumers with a world-leading offering of sports, local and global content, and ensure that Africa can tell her story to a global audience on her own terms," Canal+ says in a press statement it issued on Thursday morning.

"However, the media industry in which MultiChoice is operating is becoming increasingly globalised and competitive, with regional media companies having to compete with the firepower of global media titans, with enormous resources to invest in content, marketing and technology. Scale is the only way to survive and thrive in this environment."

Canal+ CEO and chairperson Maxime Saada says Canal+ is proud to have been involved in Africa's media sector for the past three decades.

"As a committed investor and an experienced global media company, we want to ensure that MultiChoice and the broader South African creative ecosystem are able to succeed in the long-term."

"We hope to build on our strong track record of cooperating with MultiChoice to commission ambitious and authentic African content, support more local production companies and deepen access to international sport while investing in and promoting local sport and their local stars and ambassadors."

"We believe that with greater scale, as part of a combined group with Canal+, MultiChoice would enhance its ability to navigate the structural challenges facing the media sector, creating and securing jobs, and providing a platform for the continued success of MultiChoice as Africa's leading media company."

According to Canal+ "Upon the satisfactory completion of a confirmatory due diligence, Canal+ intends to deliver a firm intention letter to the Independent Board".

"At this stage, there can be no certainty about the progression of the Potential Offer, nor the terms of any transaction that may occur."

Canal+ says it is respectful and observant of all laws and regulations relating to the South African media sector and companies listed on the Johannesburg Stock Exchange (JSE).

"Any firm intention letter submitted would be mindful of the obligations that Canal+ would have in this regard."

Canal+ which is actively preparing its listing following the unbundling announcement of its parent company Vivendi, says "This will allow investors to benefit from the combination of Canal+ and MultiChoice, our ultimate goal being to also obtain a listing in South Africa".

MultiChoice on Thursday told TVwithThinus it 'has received a letter from Canal+" and that "this high-level letter expresses a non-binding intention to make an offer to acquire the remaining ordinary shares in MultiChoice".

"MultiChoice is reviewing the letter and will at all times act in the best interests of shareholders. We will provide an update should there be any further developments. Any speculation on these matters would be inappropriate".

Groupe Canal+ first acquired a 5% shareholding in MultiChoice in April 2020. Canal+ then increased it to 12%, then increasing it to 15%, upping it to 20.12%, then 18.44%, and then 26.6% by September 2022.  By February 2023 Canal+ owned 30.2% of MultiChoice and upped it again to 31.67% later in 2023 according to LSEG data.

At 35%-ownership, Canal+ would trigger a mandatory offer to remaining shareholders under South Africa's takeover regulations.