Vivendi’s (VIV.PA), opens new tab Canal Plus has offered to buy all the shares it does not own in South Africa’s MultiChoice Group (MCGJ.J), opens new tab – a deal worth roughly $1.7 billion and one that it says would help the pay TV company thrive in a competitive international market.
Canal Plus, the top shareholder in MultiChoice with a 31.67% stake according to LSEG data, said it would likely pay 105 rand in cash per share, a 40% premium to MultiChoice’s closing share price on Wednesday.
Shares in MultiChoice surged more in Thursday morning trade but were still far below the offer price indicating a lack of investor confidence that the deal would definitely go through. They were last up 23% at 92 rand.
Canal Plus said its current offer, worth 31.7 billion rand according to Reuters calculations, is non-binding and indicative and that once due diligence has been completed, it intends to deliver a letter of firm intention to MultiChoice’s board.
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MultiChoice, which operates in 50 countries in sub-Saharan Africa, said it has received a letter from the French media company and would update shareholders should there be any further developments.
“For MultiChoice to continue to thrive in Africa it will require a strategy that enhances its scale as well as strengthened local and global expertise. Our potential offer, if successful, would be an important next step for MultiChoice to realise its full potential,” Maxime Saada, chairman and CEO of Canal Plus, said in a statement.
MultiChoice has over the years invested billions of rand to fight off competition from international streaming giants such as Netflix (NFLX.O), opens new tab, Amazon (AMZN.O), opens new tab and Disney (DIS.N), opens new tab. Netflix, for example, has also been investing in local content.
Saada added that the deal would give MultiChoice the resources to invest in scale, local African talent and stories.
As part of MultiChoice’s efforts to fight off competition, it partnered last year with Comcast’s (CMCSA.O), opens new tab NBCUniversal and Sky to revamp MultiChoice’s existing Showmax streaming service, which now offers LIVE Premier League content.
Canal Plus also said that it actively plans to list following proposals by parent company Vivendi to split into four entities and ultimately would like to also list in South Africa.
