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MultiChoice turns down R105 per share offer from Canal+

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 05 Feb 2024
MultiChoice's offices in Randburg.
MultiChoice's offices in Randburg.

Video entertainment group MultiChoice has rejected French-based Canal+’s offer to buy out the company.

Today DStv owner MultiChoice issued a statement to its shareholders telling them that Canal+ had significantly undervalued the Randburg-headquartered firm with its offer.

Last week, Canal+ confirmed it had submitted a letter to MultiChoice’s board of directors, containing a non-binding indicative offer to acquire all of the issued ordinary shares of MultiChoice that it does not already own, subject to obtaining the necessary regulatory approvals.

The French company said subject to certain confirmations that Canal+ expects following further engagements with MultiChoice, Canal+ anticipates its offer to be for a cash consideration of R105 per MultiChoice ordinary share.

This would represent a premium of 40% to MultiChoice’s closing share price of R75 on 31 January 2024.

In its statement, MultiChoice says the delivery of the Canal+ letter took place after discussions between Canal+ and MultiChoice lasting for well over a year.

It adds that following the delivery of that letter, Canal+ and its representatives have extensively discussed their proposal in public and with members of the press.

“After careful consideration, the board has concluded that the proposed offer price of R105 in cash significantly undervalues the group and its future prospects,” says the firm

It notes that he board has reached this conclusion taking into account all relevant considerations, including the following:

  • MultiChoice has recently conducted a valuation exercise, which has valued MultiChoice significantly above R105 a share.
  • MultiChoice’s valuation excludes any potential synergies which may arise from the envisaged transaction. In this regard Canal+ has, following the lengthy discussions between the parties, repeatedly conveyed to the public what it sees as the advantages of the combined entity and therefore seemingly takes the view that there are significant synergies. These synergies need to be factored into any fair offer made by Canal+.

“Therefore, while the board is open to all means of maximising shareholder value, it has conveyed to Canal+ that – at this proposed price – the letter does not provide a basis for further engagement,” says MultiChoice.

Caution is accordingly no longer required to be exercised by shareholders when dealing in their securities, it adds.

“In keeping with its duty to act in the best interests of the company, the board remains open to engage with any party in respect of any offer which is for a fair price and is subject to appropriate conditions.

“Moreover, it goes without saying that the board will continue to act in accordance with its duties in the applicable provisions of the Takeover Regulations regarding any formal and binding offer.

MultiChoice recently partnered with Comcast’s NBCUniversal and Sky to launch a streaming service targeting the African continent. With this partnership, the firm’s Showmax video streaming offering is looking to take US-based streaming service Netflix head-on.

Under this deal, the new Showmax Group will be 70% owned by MultiChoice and 30% by NBCUniversal. In Nigeria, NBCUniversal will hold an indirect 23.7% stake in the local subsidiary.

Canal+ recently increased its stake in JSE-listed MultiChoice to 31.7% after initially acquiring 6.5% of the company’s total ordinary shares in 2022.