French broadcaster Canal+ has increased its stake in South African broadcaster MultiChoice to 40.8%, edging closer to a potential takeover.
This development comes after Canal+ triggered a mandatory offer to MultiChoice shareholders in February, following its initial stake surpassing the 35% mark.
Between April 12-15, Canal+ snapped up an additional 3.5 million MultiChoice shares at an average price of R116 per share, significantly lower than its initial mandatory offer of R125.
This purchase saves Canal+ millions, with analyst Jimmy Moyaha estimating a R30 million discount on the 3 million shares acquired.
Despite the progress, regulatory challenges persist. South African law limits foreign entities’ voting rights in acquired broadcasting companies to 20%, while MultiChoice is prohibited from issuing new shares. Canal+ and MultiChoice are working together to navigate these obstacles and finalise the deal.
The fact that MultiChoice shares remain trading at a discount to the offer price suggests the market is cautious about the takeover’s completion.
Canal+ can continue buying shares at a lower price, but if the share price surpasses the offer price, it will need to revise its offer for all outstanding shares.
Both companies have committed to cooperation, with MultiChoice forming an advisory board and Canal+ reportedly in talks with Patrice Motsepe to join the bid.
As the deal inches closer, Canal+ is poised to make significant savings on its initial $1.9 billion offer. The outcome will be closely watched, as the fate of MultiChoice and its 8 million African customers hangs in the balance.
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