by Thinus Ferreira
MultiChoice's independent board created to look into the takeover offer from Vivendi's Canal+ in France has now recommended the offer of R125 per share to the pay-TV operator's shareholders, with both companies now working to see how they can circumvent and get around South Africa's strict regulations on foreign ownership of local media.
In a joint statement on Tuesday morning - MultiChoice sent their email blast at 7:22 and Canal+ sent theirs at 7:26 - the companies said that MultiChoice's independent board has concluded that the terms and conditions of the offer are fair and reasonable to MultiChoice shareholders.
South Africa's Electronic Communications Act (ECA) overseen by the Independent Communications Authority of South Africa (Icasa) prohibits foreign entities from holding more than 20% of the voting rights of a South African broadcaster like MultiChoice.
According to the ECA no foreign company or foreigner may have control over a commercial broadcasting licensee like MultiChoice in South Africa, and neither may a foreign company or foreigner have any financial interest, or an interest in either voting shares or capital of more than 20% in a commercial broadcasting licensee.
Canal+'s possible takeover deal of MultiChoice will be subjected to several regulations and approvals - including South Africa's Takeover Regulation Panel and the country's Competition Tribunal, the Johannesburg Stock Exchange (JSE), as well as the Financial Surveillance department.
MultiChoice sent out a "combined offer circular" today to its shareholders, in which it outlines the terms and conditions of Canal+'s offer.
MultiChoice and Canal+ are now hinting although not specifically saying how they are jointly working to circumvent South Africa's existing regulations on foreign media control.
"Canal+ and MultiChoice are in the process of assessing and finalising a suitable structure for the licensed activities of the MultiChoice Group to ensure compliance with the applicable limitations on foreign control on implementation of the mandatory offer, while also maintaining MultiChoice's BBBEE credentials," the companies say in their statement.
"Canal+ intends that, should its European listing proceed, there will be an opportunity for South African investors to become shareholders of the combined entity as part of a secondary inward listing on the JSE."
Maxime Saada, Canal+ CEO and chairman, in a new statement says "The publication of the Combined Circular is a step forward in our vision to create a global entertainment business with Africa at its heart".
"It includes a recommendation by the independent board of MultiChoice that our offer should be accepted by shareholders in the event it becomes unconditional, and an assessment that our offer is both fair and reasonable."
"By combining the scale, complementary geographies and content portfolios of our two companies we will create an entertainment group with international reach and strong local roots. Our aspiration is to provide viewers across the continent with a local champion that can both challenge and partner with the largest media companies in the world and which can serve powerful local stories and compelling sport, whilst investing in the local creative and sporting ecosystems to ensure their long-term success."
Elias Masilela, MultiChoice chairman, says "The offer from Canal+ is an endorsement of MultiChoice's 40-year track record and our compelling continental growth strategy".
"It is gratifying to note that foreign investors share our view that South Africa and Africa remain attractive growth markets. While we are currently successfully delivering on our mandate and strategy, Canal+'s offer provides the opportunity to accelerate these plans and form a global entertainment business with Africa at its heart, increasing value for shareholders in the process."
Max Gebhardt from FTI Consulting, and a former editor of the Financial Mail, now helps MultiChoice in the Canal+ buyout of MultiChoice with FTI Consulting saying it helps "companies seize opportunities and mitigate risk during both transformational and disruptive moments".
