Broadcast Media Africa has learnt that the recent attempted acquisition of MultiChoice by French broadcaster Canal+ has caused some rifts within the company.
Industry reports have reported that disagreements have arisen over the decision to keep MultiChoice board chair Imtiaz Patel, despite previous announcements of his retirement at the end of March and the appointment of Elias Masilela to take his place. At a board meeting on 28 March, it was announced that Patel would continue in his role while Masilela would become the company’s deputy chair. Lead independent director Jim Volkwyn reportedly chaired the meeting, and the alleged complaints revolved around how the decision gave the impression that Masilela was not competent enough to handle the Canal+ deal.
MultiChoice has responded to the Business Times, stating that the decision to extend Patel’s time as board chair was unanimous. It was also noted that Patel would not receive any additional fees that he wouldn’t have otherwise. Patel declined to comment, referring queries to MultiChoice, while Masilela said he supported the decision.
Canal+ initially offered to buy out MultiChoice for US$5.57 per share in February 2024. This was after the group increased its shareholding in MultiChoice to 35.01% of the company, exceeding the 35% threshold before a mandatory offer must be made as set by the Companies Act. MultiChoice publicly rejected this offer, and the Takeover Regulation Panel also chastised it.
The panel ruled that Canal+’s offer did not qualify to discharge its obligations under the Act, and it had to make another one. The French media conglomerate responded by increasing its offer to US$6.62 per share in cash. The remaining 64.99% of MultiChoice would’ve cost Canal+ over US$2,1 billion at that price. However, Canal+ has continued buying MultiChoice shares on the open market while the company considers its offer. It now owns over 40% of the company.
Richard Cheesman, a representative from Urquhart Partners, has suggested that evaluating MultiChoice is difficult due to its complex structure and multiple components. He said the offer must consider that MultiChoice is facing competition from global companies like Netflix and Amazon, as well as MultiChoice’s capital position, which included R8.1 billion debt at the end of September 2023. “Taking this into account, it looks like the core South African business is then valued at about nine times earnings, which seems to be in the right ballpark,” Cheesman said.
While he sees the offer as fair, he does not think it was “generous.” “It’s not clear if the group’s substantial tax losses have been taken into account, and one would expect that the merged group will have better profitability in Africa, meaning that these will be able to be utilised earlier than otherwise,” said Cheesman. He also does not believe the valuation accounts for the potential profitability of ventures like SuperSportBet and Showmax 2.0.
