French Media Giant Canal+ To Acquire Multichoice

French media giant, Canal+ has submitted an offer to buy DSTV’s parent company, Multichoice in South Africa. This is according to a statement released on Thursday and seen by various media houses. According to the statement, Canal+ a major shareholder in Multichoice, confirmed that it submitted a letter to that effect to the the Board of Directors of MultiChoice.

According to reports, the letter contained a non-binding indicative offer for Canal+ to acquire all of Multichoice’s issued ordinary shares that Canal+ does not already own. Chairman and CEO of Canal+, Maxime Saada said the purpose of the acquisition is to bring the strategy which the South African media company needs to continue thriving.

“For MultiChoice to continue to thrive in Africa, it will require a strategy that enhances its scale as well as strengthens local and global expertise. Our Potential Offer, if successful, would be an important next step for MultiChoice to realise its full potential,” the CEO said.

Multichoice: French media giant Canal+ submits bid to acquire DSTV parent company
Maxime Saada Credit: Philippe Mazzoni
The statement by Canal+ noted that the acquisition offer is subject to the French media powerhouse obtaining the necessary regulatory approvals.

“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, which would represent a premium of 40% to MultiChoice’s closing share price of R75 on 31 January 2024,” the statement reads.

Multichoice’s declining revenue and Canal’s intervention
Multichoice, the parent company of DSTV has endured a torrid business landscape across Africa in recent times. Between April 1 and September 30, the company suffered a staggering after-tax loss of R911 million ($50.2 million) during the six months representing Q2 and Q3 of 2023. This is a substantial downturn compared to the R55 million after-tax profit reported in the corresponding period of 2022.

Correspondingly, its shareholders lost $1.7 billion as the company’s share price continued to slump. The company also experienced a 1% decline in revenue, slipping from R28.7 billion to R28.3 billion. Operating profit followed suit, plummeting 22% from R6.2 billion to R4.8 billion.

In addition to these setbacks, MultiChoice’s free cash flow witnessed a significant drop, standing at R1.07 billion, reflecting a 40% decrease from the R1.8 billion reported in the previous year.
In December, the company’s Chief Financial Officer, Tim Jacobs revealed that the company is gearing up for what he called “inflationary price increases” expected to be effected in January. The CFO said this was due to mounting financial challenges as the company struggles to maintain a healthy balance sheet. According to him, inflation-level price increases for DStv are necessary to ensure sustainable growth and the continued delivery of high-quality content.

With these woes trailing the company, Canal+, having grown its investment to become the company’s largest shareholder, is looking to salvage its investment in the company. The media company believes that by combining both companies’ strengths, 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+,” the CEO, Maxime Saada said.

Canal+ noted that upon the satisfactory completion of a confirmatory due diligence, it intends to deliver a firm intention letter to the Independent Board. It noted that at this stage, there can be no certainty about the progression of the Potential Offer, nor the terms of any transaction that may occur.

Multichoice generates N277 billion from operations within Nigeria in one year
It however, said it is respectful and observant of all laws and regulations relating to the South African media sector and companies listed on the Johannesburg Stock Exchange and that any firm intention letter submitted would be mindful of the obligations that Canal+ would have in this regard.

The French giant further said it is actively preparing for its listing following the unbundling of its parent company, Vivendi. Thus, this acquisition, if it pulls through, will allow investors to benefit from the combination of Canal+ and MultiChoice.

“Our ultimate goal is to obtain a listing in South Africa,” Canal+ said.


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