The Competition Commission (CompCom) has recommended that the Competition Tribunal approves, with conditions, the proposed transaction whereby French media giant Canal+ intends to acquire SA-based video entertainment firm MultiChoice Group.
In a statement today, the CompCom says the recommendation follows its investigation of the large merger notification received on 30 September 2024.
Last year, Canal+ made a mandatory offer to acquire the MultiChoice shares it does not own, for a consideration of R125 per share.
Since the offer was announced, the companies have been in talks with South African regulators to approve the deal.
The CompCom notes the primary acquiring firm Canal+ is a subsidiary of Canal+ SA, which is listed on the London Stock Exchange’s main market.
It points out that the acquiring group is an international media firm involved in the production, commissioning and supply of audio-visual content, the provision of advertising services, development of video games and publication of books.
The acquiring group’s activities in South Africa, which are relevant for this merger assessment, is the supply of audio-visual content in the country, including to MultiChoice Group, it adds.
The primary target firm, MultiChoice Group, is a public company listed on the Johannesburg Stock Exchange (JSE).
According to the commission, MultiChoice Group is not controlled by any firm and controls a number of firms in SA, including Supersportbet, Showmax, DStv Media Sales, MultiChoice Support Service, LicenceCo, Electronic Media Network, Orbicom and SuperSport.
“Of relevance to this merger assessment is that the target group is a supplier of audio-visual content to LicenceCo. LicenceCo is a broadcaster which broadcasts audio-visual content through the DStv service, a pay or subscription-based television offering. The target group also provides audio-visual content via its streaming service, Showmax,” the CompCom says.
Considered conditions
The commission says it is of the view that the proposed transaction is unlikely to substantially lessen or prevent competition in any market.
“However, in recognition of the important role played by MultiChoice Group within the broader audio-visual ecosystem in South Africa, and to address public interest concerns raised by various stakeholders, the commission has recommended approval of the merger subject to a number of conditions, including but not limited to, addressing employment concerns, an increase in the shareholding of historically disadvantaged persons (HDPs) and workers in Orbicom and LicenceCo, supplier development commitments, the merged entity’s continued operation from South Africa, plurality of television news and export promotion.”
It adds that the merger parties have agreed to a moratorium on retrenchments for three years following the merger implementation date.
They have also committed to the requirement that the majority of LicenceCo’s shareholders will be HDPs and workers.
“Moreover, the parties have agreed to continue certain corporate social responsibility initiatives, such as skills development in the audio-visual industry and sports development.”
In addition, says the competition watchdog, Canal+ has undertaken that MultiChoice Group will remain incorporated and headquartered in South Africa, endeavour to promote exports, and will pursue a secondary inward listing on the securities exchange operated by the JSE.
The merged entity has also made supplier development commitments that include expenditure on local audio-visual content, the promotion of South African audio-visual content in new markets, and procurement from HDPs and small, medium and micro enterprises.
Finally, the parties have agreed that LicenceCo will continue to procure local news content for DStv and will ensure the diversity of the news content it broadcasts.
According to the CompCom, the total value of all the public interest commitments advanced by the merger parties (based on past spend by MultiChoice Group) is projected at a total amount of approximately R26 billion over the next three years.
“In large mergers, the commission is required to assess and to ultimately make a recommendation to the tribunal. The commission is satisfied that the conditions attached to this merger sufficiently address the concerns raised during the investigation. The matter is now before the tribunal for a final determination,” says deputy commissioner Hardin Ratshisusu.
Local content, global intent
MultiChoice and Canal+ have issued a joint statement welcoming the CompCom’s approval of the deal.
“The recommendation from the Competition Commission is a key step forward towards the completion of the transaction and a recognition of the strong package of public interest commitments provided by the parties,” says Calvo Mawela, CEO of MultiChoice Group.
“We look forward to closing the transaction, not only for the benefit of shareholders, but also for the viewing public and the multiple industries that depend on MultiChoice. We will continue to cooperate with all regulatory authorities towards a timely conclusion of this important process.”
Maxime Saada, CEO of Canal+, adds: “We welcome today’s recommendation from South Africa’s Competition Commission. This is a major step forward in our ambition to create a global media and entertainment company with Africa at its heart.
“We are committed to investing in local content and supporting South Africa’s creative and sports ecosystems. We strongly believe this transaction is positive for South Africa, providing consumers with greater choice and Africa with a true entertainment champion. We look forward to the transaction being concluded in the near future.”
Share