The Competition Tribunal has approved the multibillion-rand merger deal between South African-based video entertainment firm MultiChoice and French media giant Canal+.
In a joint statement today, the companies say the competition watchdog has given the green light to the proposed transaction, subject to agreed conditions, which include the implementation of the structure announced on 4 February.
The conditions include that MultiChoice Group will restructure so that MultiChoice (LicenceCo), which holds the South African broadcasting licence and contracts with local subscribers, becomes a separate company.
LicenceCo will stay focused on South African customers and be majority-owned by historically disadvantaged persons, including Phuthuma Nathi, Identity Partners Itai Consortium, Afrifund Consortium and a Workers’ Trust.
MultiChoice Group will keep a 49% economic interest and 20% voting rights in LicenceCo, and retain its 75% interest in MultiChoice South Africa (excluding LicenceCo).
Under the deal, viewers won’t be affected, and LicenceCo will continue working with MultiChoice Group for content, tech and support services.
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, which have to approve the deal.
The approval of the deal by the Competition Tribunal comes as the DStv operator has been facing financial challenges, as well as dwindling subscriber numbers.
In its latest financial results, MultiChoice said over the past two years, the group lost 2.8 million active linear subscribers and had to absorb a R10.2 billion negative impact on its topline due to local currency depreciation against the US dollar.
Tim Jacobs, MultiChoice group CFO, last month told ITWeb that the imminent merger deal with Canal+ will play a significant role in changing the company’s faltering fortunes.
In May, the Competition Commission recommended the Competition Tribunal approves, with conditions, the proposed $30 billion transaction.
Now, the companies say they remain on track to complete the mandatory offer by Canal+ within the timeline announced on 8 April, and prior to the long-stop date of 8 October.
Maxime Saada, CEO of Canal+, says: “The approval by South Africa’s Competition Tribunal marks the final stage in the South African competition process and clears the way for us to conclude the transaction in line with our previously communicated timeline.
“It is a hugely positive step forward in our journey to bring together two iconic media and entertainment companies and create a true champion for Africa. I’m excited about the potential this transaction unlocks for all stakeholders, notably South African consumers, creative businesses and the nation’s sporting ecosystem. The combined group will benefit from enhanced scale, greater exposure to high-growth markets and the ability to deliver meaningful synergies.”
Calvo Mawela, CEO of MultiChoice Group, adds: “The announcement marks a significant milestone and is a major step forward for both companies. It reflects the strength of our strategic vision and our ongoing commitment to continue uplifting the communities where we operate.
“We look forward to executing the remaining processes required to complete the transaction and to start building something extraordinary: a global media and entertainment company with Africa at its heart.”
In welcoming the tribunal’s order, Hardin Ratshisusu, deputy commissioner at the Competition Commission, says: “The commitments in excess of R30 billion required of the merged entity will ensure the merger has a significant positive impact in South Africa. In particular, the committed expenditure on local content will create vast opportunities for content creators.”
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