Canal+ is looking to take over MultiChoice – here’s what we know

Canal+ Group is looking to take control of MultiChoice Group and is offering R105/share - a figure noted as being 40% above the current share price. Canal already owns 31.7% of MultiChoice and has progressively been increasing its shareholding in the sub-Saharan African media company. In September 2022 Canal+ increased its stake from 20.1% to 26.3% before raising that to 30.1% by February of 2023. TechCentral previously reported, that if Canal+’s share ownership went past 35% - they would have to trigger a mandatory offer to other shareholders. Indications are that the offer would be around R48bn rand (US$2.8bn currently).

“Subject to certain confirmations that Canal+ expects following further engagements with MultiChoice, Canal+ anticipates its offer to be for a cash consideration of R105 per MultiChoice ordinary share, which would represent a premium of 40% to MultiChoice’s closing share price of R75 on 31 January.”

Canal+ statement

Why offer more for the shares than they are worth?

The premium on the share price is probably meant to incentivise shareholders to approve the deal. If the offer is simply at the current market price, shareholders might not see enough benefit in selling their shares. The premium makes the offer more attractive and encourages them to vote in favor of the acquisition. That’s most likely what Canal+ intends here. Considering that acquiring a majority stake in a company often gives the buyer (Canal+) significant control over MultiChoice’s operations and strategic direction. This control can be valuable, even if the target company's financial performance is not exceptional. The premium offer compensates shareholders for giving up this control.

Canal+ might also believe that MultiChoice’s stock is undervalued by the market and that its true potential is not being reflected in the current price. Offering a premium allows them to capture this hidden value.