MultiChoice and Canal+ have outlined three ways by which they intend to satisfy the regulatory requirements to see a deal through. The options include a corporate reorganisation of the Multichoice Group, a partnership with a local Broad-Based Black Economic Empowerment (BBBEE) partner and limiting Canal+’s voting rights.
According to South African law, foreign companies cannot have more than 20% voting rights in a South African broadcasting company. For a deal to go through, both Multichoice and Canal+ would be looking to implement any of the three alternatives to satisfy this regulatory requirement.
“Canal+ and MultiChoice will provide further details [regarding the implementation of any of the alternatives] as soon as reasonably practicable,” the two companies told shareholders this morning.
The three alternatives
The first option includes a corporate reorganisation of the Multichoice Group. “[Canal+] could form alliances with local partners who will hold a majority stake in the company. This way, it could exert indirect influence over the management of the company without exceeding the 20% voting rights limit,” said Sherilyn Kamga, a senior strategic finance analyst.
Another option the two companies outlined was partnering with a local Broad-Based Black Economic Empowerment (BBBEE) partner for a deal. In March, Patrice Motsepe, the president of the Confederation of African Football (CAF) and one of Africa’s richest persons, was reported to be in talks to join Canal+’s bid for MultiChoice. “The coming on board of [Motsepe] who would be a BBBEE partner would ensure the entity meets the threshold of local ownership required by authorities,” said Mpumelelo Ndiweni, CEO of Colmin Group, an African markets advisory and investment company.
The third option would involve limiting Canal+’s voting rights in the resultant entity. “[Canal+] can use complex investment structures, such as trusts or holdings, to hold a significant stake while adhering to voting rights limits,” added Kamga.
The two companies have until April 2025 to decide on a requisite structure.