By 
MultiChoice Group has initiated a complex restructuring plan to facilitate its acquisition by French media conglomerate Group Canal+. This sweeping corporate overhaul is designed to navigate South Africa’s strict broadcasting and empowerment laws, ultimately clearing the path for a R55 billion takeover.
The mandatory offer from Canal+, priced at R125 per share, was triggered after the company surpassed a 35% stake in MultiChoice, a threshold that compels a full buyout bid under South African law. However, the acquisition has been anything but straightforward, entangled in negotiations with the MultiChoice board, a public dispute with the Takeover Regulation Panel, and the significant challenge of complying with local ownership rules.
Central to the deal’s viability is adherence to the Electronic Communications Act, which mandates that broadcasting licensees must be at least 30% owned by historically disadvantaged persons (HDPs). Furthermore, foreign entities are restricted from exerting majority control over a local broadcaster. To satisfy these requirements, MultiChoice will carve out its South African broadcasting licence into a new, separate entity.
This new company, dubbed LicenceCo, will be structured to ensure majority economic ownership and control by HDPs. MultiChoice Group will retain a 49% economic interest but its voting rights will be capped at 20%, aligning with legislative stipulations that limit Canal+’s influence post-acquisition.
The intricate transaction involves MultiChoice entering into agreements with four specific entities to distribute LicenceCo’s shares: the existing empowerment scheme Phuthuma Nathi, the newly-formed MultiChoice Workers Trust, 13th Avenue Investments, and the Identity Partners Itai Consortium (IPIC).
A detailed breakdown of the shareholding structure reveals a carefully calibrated balance of economic and voting power:
MultiChoice Group will hold ordinary shares for a 49% economic interest and 20% of the vote. Phuthuma Nathi, the longstanding BEE partner, will hold a combined 27.03% economic interest across different share classes, commanding 39% of the voting rights. 3th Avenue Investments and IPIC will each hold a 9.5% economic interest and 16.23% of the voting rights and the Workers Trust, established for employees and key suppliers, will hold a 5% economic interest and 8.54% of the vote.
The funding mechanisms for these stakes vary. Phuthuma Nathi will acquire its significant shareholding through a substantial R3.77 billion vendor loan from MultiChoice itself. In contrast, the consortiums 13th Avenue and IPIC will pay a combined R287 million for their shares. These entities will receive a mix of share classes that gradually convert to full rights as funding balances are paid down.
The restructuring extends beyond LicenceCo to include Orbicom, MultiChoice’s signal distributor. Phuthuma Nathi’s existing indirect stake in Orbicom will be increased to 40%, with 20% being held directly. In total, the transactions will see MultiChoice dispose of 26% of its economic interest in LicenceCo and 15% in Orbicom.
MultiChoice emphasized that the reorganization, classified as a Category 2 transaction under JSE rules, does not require shareholder approval. As part of the financial rearrangements, a R1.375 billion extraordinary dividend will be paid to MultiChoice and Phuthuma Nathi shareholders, with R343.75 million earmarked for the latter.
The company stated that the restructuring is a direct condition imposed by the South African Competition Tribunal for approving Canal+’s mandatory offer. An updated timetable for the finalization of the R125-per-share offer will be released once the reorganization is fully implemented.
Both companies have moved to assure stakeholders that the transition will be seamless for DStv subscribers in South Africa. Canal+ CEO Maxime Saada framed the acquisition as a strategic necessity, stating it would create a “unique global media company with a strong presence across Africa,” equipped with the “scale, expertise and creativity to compete and partner with the largest players.”
Saada emphasized that Broad-Based Black Economic Empowerment was placed “at the heart of the transaction,” welcoming the new HDP shareholders and broadened employee ownership.
Echoing this sentiment, MultiChoice CEO Calvo Mawela highlighted the competitive pressures of the fast-evolving video entertainment industry. He expressed excitement about combining forces with Canal+ to achieve greater scale and enhance offerings for subscribers.
This meticulous restructuring underscores the lengths to which international corporations must go to align with South Africa’s unique socio-economic policies, transforming a straightforward corporate takeover into a landmark transaction for the country’s media landscape.
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