Canal+ Boosts Ownership in MultiChoice to 40.83%

The French media giant, Groupe Canal+, has further extended its position in the South African pay-TV titan, MultiChoice, by acquiring an additional 3,653,492 shares. With this latest move, Groupe Canal+ now commands an impressive 40.83% stake in MultiChoice. This surge in ownership transpired over a six-day period from April 12th to April 17th, with shares procured at prices ranging from R115.95 to R117.50 each.

Following regulatory mandates, Groupe Canal+ has duly announced this share acquisition to the Takeover Regulation Panel (TRP) in line with the stipulations delineated in the Companies Act.

Furthermore, the company has issued a formal communication to MultiChoice shareholders, indicating its potential interest in acquiring further shares, subject to regulatory constraints outlined in the Companies Act and Takeover Regulations.

The disclosure from Canal+ arrives on the heels of MultiChoice's own announcement just a week prior, confirming Canal+'s surpassing of the 40% ownership threshold. Subsequently, certain MultiChoice shareholders have sought clarification on whether Canal+ harbours intentions of exceeding a 50% stake, which would entail majority ownership. In response, MultiChoice has conveyed that such a scenario appears unlikely, as crossing the 50% threshold would trigger a merger situation under the Competition Act, necessitating prior approval from the Competition Tribunal.

MultiChoice has also outlined a stipulation that should Groupe Canal+ wish to acquire shares at a price exceeding R125 each, they would be then compelled to proportionally increase their offer price for the additional shares.

The gradual acquisition of MultiChoice by Canal+, often referred to as a ‘creeping takeover,’ has been in progress since 2020. Attention was drawn to this growing investment when it first exceeded the 20% mark, raising questions about potential conflicts with the Electronic Communications Act (ECA) of South Africa.

The Act states that a foreigner may not, whether directly or indirectly: Exercise control over a commercial broadcasting licensee; or have a financial interest or an interest either in voting shares or paid-up capital in a commercial broadcasting licensee exceeding 20%.

MultiChoice has addressed the issues regarding compliance with the South African Electronic Communications Act (ECA), which were raised in light of Groupe Canal+’s increasing ownership. The company clarified that it has taken measures to remain aligned with the ECA’s stipulations. These measures are encapsulated within the company’s memorandum of incorporation, which contains specific provisions to prevent any breaches of the ECA.

A key restriction outlined in the memorandum is the limitation of collective voting rights for foreign investors; these are capped at 20%. This effectively means that, despite the percentage of ownership that foreign entities like Groupe Canal+ might accumulate in MultiChoice, their aggregate voting power is restricted, safeguarding the company’s compliance with the ECA. Through this structured approach, MultiChoice ensures that even if foreign ownership stakes increase, the control exerted through voting rights remains within the legal framework mandated by South African law.