By Lehlohonolo Lehana.
Multichoice Group has rejected a bid by France’s Groupe Canal+ to buy out the JSE-listed parent of DStv and Showmax, saying the R105/share indicative offer price undervalues the business.
Last week, Canal+ said it would offer shareholders a cash payment of R105 per MultiChoice ordinary share, a premium of 40% to the JSE-listed company’s closing share price of R75 on Wednesday, the day before the offer.
“The delivery of the Canal+ letter took place after discussions between Canal+ and MultiChoice lasting for well over a year. Following the delivery of that letter, Canal+ and its representatives have extensively discussed their proposal in public and with members of the press,” MultiChoice said in a statement to shareholders on Monday, issued via the JSE.
“After careful consideration, the board has concluded that the proposed offer price of R105 in cash significantly undervalues the group and its future prospects.”
It said MultiChoice recently conducted a valuation exercise that valued the group at “significantly above R105/share”.
“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,” it said.
Canal+, meanwhile, shows no sign of backing down. MultiChoice also announced to shareholders on Monday, again via the JSE, that Canal+ has bought 35.01% of its ordinary shares in issue, up from 31.7% last July — the last time a figure was disclosed.
“MultiChoice has filed the required notice with the Takeover Regulation Panel… MultiChoice has also requested the TRP to make a ruling as to whether a mandatory offer must be made to all holders of ordinary shares in the company… A further announcement will be released if there are further developments.”
Analysts described its non-binding offer as fair given the current environment, though MultiChoice had been trading at the offer level less than a year ago.
With its over 35% stake, Canal+ is the company’s largest shareholder. The next largest shareholder is the Public Investment Corporation at over 12%.
SA’s Electronic Communications Act places limitations on foreign ownership of local broadcast licences, so while Canal+ can increase its shareholding in MultiChoice to any level, its voting rights are limited to a maximum of 20%.