France’s Groupe Canal+ has increased its stake in JSE-listed MultiChoice Group – the parent of DStv, SuperSport and Showmax – to 31.7%. This was disclosed in MultiChoice’s annual report, published on Friday. Canal+ is owned by French media giant Vivendi.
The last time MultiChoice declared details about the stake, on 10 February, Canal+ owned 30.3% of the group’s total ordinary shares in issue. The jury is out on the legalities on whether they can jump 35%, and what it means and what it doesn’t mean.
MultiChoice Group CEO Calvo Mawela said the broadcaster “continues to have engagements on a regular basis” with Canal+ as the two businesses “look at areas of collaboration”.
“We will continue to do more. We are working together on content. They still believe there is value in this company,” Mawela said.
Canal+ has steadily been buying shares in MultiChoice since 2020. Last September, it ramped up its buying, increasing its stake from 20.1% – disclosed last July – to 26.3%. It increased that to 30.3% by February this year.
The moves once again raise questions about Canal+’s ultimate intentions, specifically whether it plans to make an offer to MultiChoice’s minorities – a move that could be difficult to execute given South Africa’s restrictions around the foreign ownership of broadcasters.
Canal+ previously told MultiChoice that it views the stake as a financial investment. The two companies have worked together for years, sharing content between their respective markets.
Now at 31.7%, Canal+ is inching closer to the 35% threshold at which it might have to trigger a mandatory offer to other shareholders. It’s not, however, entirely clear whether a mandatory offer would be triggered as this is open to legal interpretation, said Mawela.
“The jury is out on the legalities on whether they can jump 35%, and what it means and what it doesn’t mean. It will depend on the legal position taken by the authorities.”
According to corporate law firm Baker McKenzie, the threshold in South Africa for triggering a mandatory offer to also acquire all the securities of the remaining shareholders is the acquisition of 35% or more of the voting securities of a company or of any class of such securities.
“For purposes of determining such holding, the holdings of all persons acting in concert are aggregated. A bidder is exempt from the requirement to make a mandatory offer if 1) the bidder would acquire voting securities in the target by means of an issue of securities (and not a direct sale from a offeree shareholder); 2) the holders of a majority of the independent shares of the target (shareholders other than the bidder and its concert parties, have agreed to waive the mandatory offer; and 3) the Takeover Regulation Panel exempts the bidder from making a mandatory offer.”
Canal+’s 31.7% stake in MultiChoice also appears to be higher than what’s permitted under South African broadcasting legislation, which limits foreign ownership of South African broadcasters to 20%. However, MultiChoice said earlier this year that it will remain compliant with the rules around foreign ownership.
It explained that a provision in its memorandum of incorporation permits it to reduce the voting rights of shares so that the aggregate voting power of shares held by foreigners is kept below 20% of the total voting power in the company.
“This is to ensure compliance with certain statutory requirements applicable to South Africa,” it said. For this purpose, MultiChoice will assume all shares deposited under an American Depository Receipts programme are held by foreigners, regardless of their actual nationality. Also, all shareholders with an address outside South Africa will deem to be foreigners unless they can prove otherwise, it said.