MultiChoice rejects Canal+ offer price

MultiChoice said Canal+’s offer to buy the company at R105 significantly undervalues the company.

This comes after Canal+ submitted a letter to the MultiChoice board last week containing a non-binding offer to acquire all of the issued ordinary shares of MultiChoice that it does not already own.

Canal+’s offer is a cash consideration of R105.00 per MultiChoice ordinary share, representing a premium of 40% to MultiChoice’s closing share price of R75.00 on 31 January 2024.

The offer is subject to confirmations that Canal+ expects following further engagements with MultiChoice.

Upon the satisfactory completion of a confirmatory due diligence, Canal+ intends to deliver a firm intention letter to the independent board.

“At this stage, there can be no certainty about the progression of the potential offer, nor the terms of any transaction that may occur,” Canal+ said.

“Canal+ is respectful and observant of all laws and regulations relating to the South African media sector and companies listed on the Johannesburg Stock Exchange.”

“Any firm intention letter submitted would be mindful of the obligations that Canal+ would have in this regard.”

However, MultiChoice informed shareholders this morning that, after careful consideration, its board concluded that the proposed offer price of R105 in cash significantly undervalues the group and its future prospects. 

MultiChoice said it reached this conclusion by taking into account all relevant considerations.

In particular, it said the company recently conducted a valuation exercise, which valued MultiChoice significantly above R105 a share.

It said MultiChoice’s valuation excludes any potential synergies which may arise from the envisaged transaction. 

“In this regard, Canal+ has, following the lengthy discussions between the parties, repeatedly conveyed to the public what it sees as the advantages of the combined entity and therefore seemingly takes the view that there are significant synergies,” the company said.

“These synergies need to be factored into any fair offer made by Canal+.”

“Therefore, while the Board is open to all means of maximising shareholder value, it has conveyed to Canal+ that – at this proposed price – the letter does not provide a basis for further engagement.” 

However, MultiChoice reiterated that its board remains open to engage with any party in respect of any offer which is for a fair price and is subject to appropriate conditions.

Increased stake

This news follows another announcement today that Canal+ has acquired an additional interest in MultiChoice.

Canal+’s stake in the company now amounts to 35.01% of MultiChoice’s total ordinary shares in issue.

In recent years, Canal+ has been buying shares in MultiChoice and had a shareholding of 31.67% by the end of March 2023.

MultiChoice’s January share register also indicated that Canal+ had increased its stake.

In specific circumstances, South African law requires a company with a stake of 35% or over to make a mandatory offer to minority shareholders to buy out the company.