Canal+ and MultiChoice Announce Key Steps in Mandatory Offer Process

February 4, 2025

3 min read

Author: Editorial Team

Multichoice and Canal + have released a joint announcement.

The Combined Circular stated that: “In light of the duty on Canal+ to make a mandatory offer for the MultiChoice Shares, Canal+ and MultiChoice are in the process of assessing and finalising suitable structuring options and potential transactions, which may be undertaken by the MultiChoice Group on or shortly before the Closing Date to ensure compliance with the applicable limitations on foreign control while also maintaining MultiChoice’s Broad-Based Black Economic Empowerment (BBBEE) credentials.”

Canal+ and MultiChoice are pleased to inform shareholders that they have concluded their discussions regarding their intended post-transaction structure of MultiChoice. Canal+ and MultiChoice have engaged with the Board of Directors of Phuthuma Nathi, which has given in-principle support for the transaction. An Independent Board of Phuthuma Nathi will be constituted to review and consider the necessary formal proposals in accordance with the relevant regulations.

These developments mark further important steps forward in the transaction process.

The key features of the intended post-transaction structure will be as follows:

The MultiChoice Group will be restructured so that the current holder of the broadcasting licence in South Africa and the entity which contracts with South African subscribers, MultiChoice (Pty) Ltd (“Licence Co”), will be carved out of the MultiChoice Group and will become an independent entity. The remainder of the group’s video entertainment assets will remain part of the MultiChoice Group.
LicenceCo will continue to hold the subscription broadcasting licence in South Africa. It will continue to contract with MultiChoice’s South African subscribers.
LicenceCo will be majority owned by Historically Disadvantaged Persons (HDPs): a. Phuthuma Nathi, which will ultimately hold a 27% economic interest in LicenceCo; b. two well established black owned and managed companies, Identity Partners Itai Consortium and Afrifund Consortium, whose highly experienced leaders bring with them great commercial and industry knowledge; and c. a Workers’ Trust (ESOP).
MultiChoice Group’s shareholding in LicenceCo will ultimately give it a 49% economic interest and 20% share of voting rights.
MultiChoice Group will also retain its existing 75% direct interest in MultiChoice South Africa, which will exclude LicenceCo. Phuthuma Nathi will similarly retain its existing 25% interest in MultiChoice South Africa.
LicenceCo will enter into various commercial agreements with MultiChoice Group subsidiaries in relation to the services currently provided to LicenceCo by other MultiChoice Group entities. These relate to, among other things, the provision of content, technology, subscriber management and support and other functions.
The transaction will not lead to any disruption for LicenceCo’s South African viewers, who will continue to access its services as normal. In time those subscribers will benefit from the additional content and technology investments envisaged by the MultiChoice Group, in its capacity as supplier to LicenceCo.

Canal+ and MultiChoice are confident that the envisaged structure meets the requirements of all applicable laws, including the restrictions on foreign ownership and control of broadcasting licences contained in the Electronic Communications Act, 2005.