MultiChoice says ‘no’ to Canal+ as it takes stake beyond mandatory offer threshold

Source: MultiChoice

MultiChoice has rejected Canal+’s bid to acquire control of the company, arguing that the offer undervalued its shares, while the French pay TV operator has increased its stake beyond a threshold that obliges it to make a mandatory offer.

In a regulatory disclosure, the South African pay TV operator said that its board “has concluded that the proposed offer price of ZAR105 in cash significantly undervalues the Group and its future prospects”.

MultiChoice said that it had recently conducted a valuation exercise that valued the company “significantly above R105 a share” and argued that this valuation excluded synergies that could arise from Canal+’s acqusi8tion of the company.

It said that Canal+ had, following “lengthy discussions between the parties”, publicly stated that it saw advantages in the combination, implying that there are “significant synergies” that would “need to be factored into any fair offer made by Canal+”.

MultiChoice said its board had concluded that Canal+’s bid “does not provide a basis for further engagement” at the current price offered.

Mandatory offer

In a second disclosure, MultiChoice also revealed that Canal+ had upped its stake in the pay TV operator to 35.01%, up from the 31.67% it held on Thursday.

This takes Canal+ beyond the 35% threshold that obliges it to make a mandatory offer under South African law.

MultiChoice said it had filed a notice with the country’s takeover panel, the TRP, to make a ruling as to whether a mandatory offer must be made to all holders of ordinary shares.

The developments follow the US$1.7 billion bid from Canal+ at the end of last week to acquire the 68% of MultiChoice’s shares that it did not already own.

The French group said that, subject to a confirmatory audit, it would submit a firm offer to MultiChoice’s board.

Canal+ noted that parent Vivendi is in the midst of preparing to float it as a separately listed company, enabling investors to benefit directly from the merger with MultiChoice, and said that one goal with the acquisition would be to be listed on South Africa’s stock exchange.

The acquisition of MultiChoice, with its presence in Anglophone markets across the continent, would make Canal+, which operates pay TV services across Francophone African countries, the major player in the African pay TV market.