French television broadcaster Groupe Canal+ has been given an extra 25 days to make a mandatory offer to shareholders of JSE-listed MultiChoice Group.
The South African pay-TV operator disclosed this in a statement to shareholders on Monday, in which it said that the Takeover Regulation Panel (TRP) has granted Canal+ an extension until 8 April to make the enforced offer.
This comes after the TRP ruled that Canal+, after having bought more than 35% of MultiChoice’s shares, had triggered the threshold under South African law that required it to make the mandatory offer.
MultiChoice’s board had on 5 February spurned the Canal+ indicative offer of $5.52/share and told its shareholders that they no longer had to exercise caution in trading in the group’s shares. But that was before Canal+ upped its stake to beyond 35%.
“Shareholders are advised that the TRP issued a ruling on 27 February to the effect that Canal+ has acquired 35.01% of the voting rights in MultiChoice and, accordingly, a mandatory offer in terms of section 123 of the [Companies Act] has been triggered,” MultiChoice said in a statement to shareholders on 28 February.
According to the regulations, Canal+ must make a “firm intention announcement” to MultiChoice shareholders. Section 111(2) of the companies regulations – an adjunct to the Companies Act – stipulates that the offer price must be, at a minimum, the highest price that Canal+ has paid for acquiring MultiChoice shares in the last six months, TechCentral reported last week.
Offer price
“However, regulation 111(3) allows for deviations from the highest-price-paid principle if the offer or (Canal+) believes that it is not applicable in a particular case. An offer or may consult the [TRP], which has the discretion to agree to an adjusted offer consideration if it deems it appropriate under the circumstances,” according to the regulations.
Canal+ had been steadily buying up shares in MultiChoice since 2020. For much of that time, the South African broadcasting group’s share price soared above the $6.31/share mark. In the last year, however, the price swung from a peak of more than $7.88/share, reached in February 2023, to a low point of $3.32/share last November.
It is unclear what the highest price is that Canal+ paid for MultiChoice shares in the last six months, but from historical share price data, the value must be a minimum of between $3.31/share and $4.83/share – well below the $5.52/share the French broadcaster has said it is prepared to pay shareholders to secure a deal.
Fifty percent of the voting rights in MultiChoice, other than those held by Canal+ (understood to be capped at 20%), must agree for the mandatory offer to succeed. Barring that, Canal+ is not at liberty to back out of the deal.
But even if the deal gets approval from shareholders, Canal+’s efforts to acquire MultiChoice could still be stymied by legislation that caps voting control of South African broadcasting licensees by foreign entities at 20%. This restriction is contained in the Electronics Communications Act.
MultiChoice said on Monday that its board “will continue to act in the best interests of the company and its shareholders”.
Shares in the broadcaster were changing hands on the JSE at $5.54 each shortly after 10am on Monday.
