End of era for DStv-owner

MultiChoice’s plans to reorganise its operations in preparation for its deal with French media giant Canal+ have become unconditional.

On Monday, 15 September, MultiChoice announced that the first steps of the reorganisation will now commence.

This will enable the implementation of Canal+’s mandatory offer for MultiChoice, which will see the French media conglomerate acquire all the company’s issued ordinary shares for R125 per share.

This deal is now well on its way to full approval after the Competition Tribunal recently gave it the green light, with certain conditions.

Successfully completing the restructuring is one of the tribunal’s conditions and will see MultiChoice tick many of the boxes still left to complete the transaction.

In addition, the companies have already obtained certain other regulatory approvals, including from the Prudential Authority, and third-party consents, including the approval of MultiChoice’s funders, to implement the reorganisation.

This reorganisation was needed to comply with certain legal restrictions at play with Canal+’s proposed acquisition.

Specifically, the Electronic Communications Act (ECA) limits foreign control of commercial broadcasting services through strict ownership rules.

This legislation states that a foreigner may not, directly or indirectly, exercise control over a commercial broadcasting licensee. In addition, not more than 20% of the directors of a commercial broadcasting licensee may be foreigners.

To comply with this legislation, MultiChoice is introducing a new structure for its South African business post-merger.

The part of its business that currently holds the broadcasting licence in South Africa and the entity which contracts with South African subscribers was carved out as an independent entity known as LicenceCo.

The remainder of MultiChoice’s video entertainment assets will remain part of the MultiChoice Group.

MultiChoice previously explained that this reorganisation is specifically designed to ensure that the licensed entities within the MultiChoice group remain compliant with foreign control restrictions under the ECA.

This restructuring will also preserve the integrity of the company’s broadcasting and signal distribution licences.

“An updated timetable for the mandatory offer will be released once the implementation of the reorganisation has been concluded,” MultiChoice said in the announcement.