French firm makes mandatory buyout offer for MultiChoice

French media group Vivendi’s Canal+ made an all-cash mandatory offer on Monday to buy all the shares of South African broadcaster MultiChoice, which it does not already own for 35 billion rand ($1.9 billion), both companies said.

That offer at 125 rands per share follows an indicative offer of 105 rands made by Canal+ on Feb. 1, which MultiChoice rejected as significantly undervaluing the company.

The need to make a mandatory offer was triggered by Canal+, MultiChoice’s biggest shareholder, subsequently raising its holding in the firm above the 35 per cent threshold. Its new offer values MultiChoice, in which it now owns a 36.6 per cent stake, at about 55 billion rand, according to Reuters calculations.

The deal would create a pan-African broadcasting powerhouse with about 31.5 million subscribers across over 50 countries, able to put African content to global audiences as well as compete on an international scale.

The French media company has a broad reach in French-speaking African nations, while MultiChoice has a stronger presence in English-speaking countries, including South Africa, Nigeria and Kenya.

Canal+ said it believes the competitive landscape for Africa’s media and entertainment industry will undergo further profound changes as the continent rapidly adopts broadband and mobile Internet. Smartphone adoption is also rising.

“A combined group would be better positioned to address key structural challenges and opportunities resulting from the progressive digitalisation and globalisation of the media and entertainment sector,” the companies said.

MultiChoice’s independent board constituted for the deal will now consider the bid.

The arrangement showed that Canal+ reserves the right to buy more MultiChoice shares in the market during the offer. Should the French company buy these shares at more than 125 rands each, it is obliged to increase the offer price, according to the statement.

Meanwhile, for the deal to be successful, the French broadcaster will need to navigate the country’s stringent Black economic ownership requirements and restrictions on foreign media ownership, which caps voting rights at 20 per cent.