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Canal+ seeks full control of MultiChoice

February 1, 2024

Canal+, owned by French media group Vivendi, has made an offer to acquire all the shares it does not already own in South Africa’s MultiChoice Group. Any potential deal – which has been submitted to the MultiChoice board of directors – would be worth in the region of €1.6 billion and, according to Canal+, would help the pay-TV company thrive in a competitive international market.

Canal+, already top shareholder in MultiChoice with a 31.67 per cent stake, said it would likely pay 105 rand (€5.19) in cash per share, a 40 per cent premium to MultiChoice’s closing share price on January 31st according to Reuters.

Maxime Saada, chairman and CEO of Canal+, commented: “Canal+ is a long-term investor in both MultiChoice and South Africa, and is proud to have been actively involved in Africa’s media sector for 30 years. For MultiChoice to continue to thrive in Africa, it will require a strategy that enhances its scale, as well as strengthened local and global expertise. Our potential offer, if successful, would be an important next step for MultiChoice to realise its full potential. Combined with Canal+, MultiChoice would have the resources to invest in scale, local African talent and stories, and best-in-class technology, to allow it to grow in Africa and compete with the global streaming media giants. We are steadfast in our belief that MultiChoice could enjoy a bright future as part of a combined group with Canal+.”

Saada continued: “As a committed investor and an experienced global media company, we want to ensure 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 co-operating 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. In turn, this will give viewers more compelling content and further enable Africa to tell her story to a global audience on her own terms. 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.”

MultiChoice confirming it has received the offer from Canal+, and in its own statement said: “Accordingly, shareholders are advised to exercise caution when dealing in the group’s securities until a further announcement is made.”

MultiChoice is Netflix’s biggest rival in Africa via its Showmax platform, but it has had to invest heavily to scale up the service, which it is relaunching this month with investment from Sky and Comcast’s NBCUniversal.

Canal+ will somehow have to finesse its way around South African laws that forbidding foreign owners from controlling more than 20 per cent of the voting rights in the country’s broadcasters. “Canal+ is respectful and observant of all laws and regulations relating to the South African media sector and companies listed on the Johannesburg Stock Exchange,” the company said. “Any firm intention letter submitted would be mindful of the obligations that Canal+ would have in this regard.”

Vivendi, which believes itself to suffer from a ‘conglomerate discount,’ is splitting itself into up to four spun-out entities.

MultiChoice reported a R911mn (€44,3m) loss in the six months to the end of September as it scaled up investment in Showmax. MultiChoice had 21.6 million active subscribers at the end of September 2023. The number in South Africa fell to 8.6 million, a 5 per cent drop on the same period a year before. Canal+ had 8 million subscribers in French-speaking countries, said Saada.

Sky and Comcast took a 30 per cent stake last year in the Showmax streaming venture, which is aiming to reach $1 billion in revenue by 2028. The venture partners would have pumped $177 million of equity funding into the platform by the end of March.

Responding to the news, BNPP, the multinational universal bank, said: “Canal+ growth strategy comes expanding in International African and Asian growth markets, investing in Studio Canal, the largest content producer in Europe while managing through a difficult French TV market. In that sense acquiring MultiChoice will help expand its African footprint.”

“With close to 50 million global subscribers this deal will make Canal+ a leading entertainment group globally better positioned to compete with the likes of Netflix (260m subscribers). MCG share price closed yesterday near to all time lows and 40 per cent below its peak of January 2023 in a context of a 2 per cent decline in subscriber numbers -driven by a 5 per cent decline in South Africa and 1 per cent growth in Rest of Africa – reported in H1 24. We believe this deal makes strategic sense and could prove timely. Canal+ has not disclosed any cost synergies nor EPS accretion it expects from this deal,” added the bank.

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