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Vivendi’s Canal+ has made a mandatory offer to buy South Africa’s MultiChoice in a deal that values the company at $2.9bn, with the French media group saying it is confident about overcoming regulatory hurdles given its experience elsewhere in Africa.
MultiChoice has appointed an independent board to review the revised offer of R125 a share, made last month after it rejected an original cash offer of R105 in February. MultiChoice shares rose by up to 5 per cent on Monday, taking their gain since Canal+’s first approach to about 24 per cent.
At R118 they remain below the offer price, pointing to the hurdles that Canal+ is facing to close a deal. The bid represents a two-thirds premium to MultiChoice’s market value before the first offer was announced.
If the deal goes through, Canal+ will have to navigate South African legislation that prevents foreign owners from controlling more than 20 per cent of voting rights in national broadcasters. Canal+ has a year to obtain regulatory approval for the proposed deal.
Maxime Saada, the chief executive of Canal+, said the company had navigated similar challenges during its three decades operating in Francophone Africa.
“We have local partnerships and local shareholders involved, and we have a listing in Johannesburg,” he added, referring to the fact that Canal+ already owns 36.6 per cent stake in MultiChoice. “We are very familiar with this kind of hurdle. We have a number of ways in mind to address this,” he told the Financial Times.
Canal+, which Vivendi is preparing to spin off, will make its offer available through a circular to all shareholders within the next 20 business days, requesting an extension if needed, Saada said.
A deal would allow the French entertainment giant to expand its foothold in the continent’s rapidly growing streaming market. Spurred by a young, booming population that is increasingly connected, African digital subscribers are projected to more than double to 18mn paying streaming customers by 2029 from 8mn last year, according to London-based company Digital TV Research.
“MultiChoice will become part of a global entertainment leader, with Africa at its heart, which is capable of competing and co-operating with the largest international media companies, streaming platforms and studios,” the company said in a joint statement with Canal+.
However, the market remains tough to crack. Saada said the company was undaunted by the recent pullback of would-be rivals Amazon, the third biggest streaming company on the continent, which in January retrenched its Africa operations to focus on more profitable European markets.
Instead, he saw other global streaming giants, including Netflix, as healthy competition. “[Netflix] have convinced people to pay for content. Our main challenge generally is to convince people to pay when so much is available for free. They have increased the size of the market, and 1712649833 we fight for market share.”
MultiChoice’s Showmax platform is the continent’s biggest homegrown streamer, but it has had to invest heavily to scale up the service. It relaunched in February with investment from Sky and Comcast’s NBCUniversal. A deal with MultiChoice is expected to create close to 30mn subscribers in Africa, Saada said.
“African content will be at the core of the new company. We don’t see investing in local content as a side business, we see it as our main differentiating factor,” Saada added.
