04 February 2025
Progress update on Canal+ mandatory offer, including proposed re-structuring of MultiChoice South Africa''s shareholding
BACKGROUND
On 8 April 2024, the MultiChoice Group and Groupe CANAL+ (“Canal+”) announced that Canal+ was making a mandatory cash offer to buy all the shares of the MultiChoice Group that it did not already own for R125.00 per share in cash. We shared a communication with you about this on 23 April 2024.
Shareholders are reminded that MultiChoice Group owns 75% of MultiChoice South Africa, with Phuthuma Nathi owning the remaining 25%.
On 4 June 2024, we shared with you that the parties had published a Combined Circular setting out the terms and conditions of the mandatory offer and re-iterating their commitment to foster BBBEE initiatives and the transformation of the South African business as a commercial and societal imperative. The Combined Circular also stated that Canal+ and MultiChoice Group had to consider suitable structures and transactions to ensure compliance with the applicable limitations on foreign control, while also maintaining MultiChoice's BBBEE credentials.
On 30 September 2024, we shared with you that the parties had submitted a joint merger control filing in relation to the offer to the Competition Commission and that the parties were engaging with the Independent Communications Authority of South Africa.
UPDATE ON DEVELOPMENTS
Today, we are pleased to inform you that Canal+ and the MultiChoice Group have concluded their discussions regarding the intended post-transaction structure of the MultiChoice Group. As part of this process they have engaged with the Board of Directors of Phuthuma Nathi. On 20 January 2025, the Board of Phuthuma Nathi gave its in-principle support for the transaction.
In accordance with the relevant regulations, an Independent Board of Phuthuma Nathi will be constituted to review and consider the necessary formal proposals in accordance. Where those formal proposals require approval of Phuthuma Nathi shareholders, the proposals will be put to the shareholders, together with the recommendation of the Independent Board of Phuthuma Nathi.
The key features of the intended post-transaction structure, to be implemented on or shortly before the closing date of the offer once all required approvals have been obtained, will be as follows:
- The current holder of the broadcasting licence in South Africa and the entity which contracts with South African subscribers, MultiChoice (Pty) Ltd (“LicenceCo”) will be carved out of MultiChoice Group and will become an independent entity. The remainder of the group's video entertainment assets will remain part of MultiChoice Group.
- LicenceCo will continue to hold the subscription broadcasting licence in South Africa. It will continue to contract with MultiChoice's South African subscribers.
- LicenceCo will be majority owned by Historically Disadvantaged Persons (HDPs):
- Phuthuma Nathi, which will ultimately hold a 27% economic interest in LicenceCo;
- two well established black owned and managed companies, Identity Partners Itai Consortium and Afrifund Consortium, whose highly experienced leaders bring with them strong commercial and industry knowledge; and
- a Workers' Trust (ESOP).
- MultiChoice Group's shareholding in LicenceCo will ultimately give it a 49% economic interest and 20% share of the voting rights.
- MultiChoice Group will also retain its existing 75% direct interest in MultiChoice South Africa, which will exclude LicenceCo. Phuthuma Nathi will similarly retain its existing 25% interest in MultiChoice South Africa.
- LicenceCo will enter into various commercial agreements with MultiChoice Group subsidiaries in relation to services currently provided to LicenceCo by other MultiChoice Group entities. These relate to, among other things, the provision of content, technology, subscriber management and support and other functions.
- The transaction will not lead to any disruption for LicenceCo's South African viewers, who will continue to access its services as normal. In time subscribers will benefit from the additional content and technology investments envisaged by the combined Group, in its capacity as supplier to LicenceCo.
Canal+ and the MultiChoice Group are confident that the envisaged structure meets the requirements of all applicable laws, including the restrictions on foreign ownership and control of broadcasting licences contained in the Electronic Communications Act, 2005.
Today's announcement marks another step forward in the transaction process and on the pathway to create a media and entertainment champion for Africa on the global stage. The transaction remains subject to regulatory review across numerous jurisdictions including South Africa. It will also be assessed by an Independent Board of Phuthuma Nathi, following the in-principle support given by the Phuthuma Nathi Board.
ADDITIONAL DIRECTORS APPOINTED TO PHUTHUMA NATHI BOARD
In order to ensure compliance with the relevant regulations in the next steps of this process, the Phuthuma Nathi Board has co-opted two additional independent directors onto the Board.
The two directors co-opted are:
- Mr Peter Zimri, who has 30 years international and domestic experience in the public and private telecommunication/ICT sectors, including in relation to public policy, regulatory, corporate governance and technical issues.
- Ms Lerato Pule, who has 17 years of experience at operational and strategic levels in various industries, including financial business management; governance and management oversight; and compliance and risk management.
We remain committed to keep Phuthuma Nathi shareholders updated as things progress further. In the meantime, you can read all about the Canal+ mandatory offer to MultiChoice Group shareholders on the MultiChoice website (https://investors.multichoice.com/regulatory.php).
The Board of Phuthuma Nathi accepts responsibility for the information contained in this announcement, to the extent that it relates to Phuthuma Nathi, and confirms that, to the best of its knowledge and belief, such information relating to Phuthuma Nathi is true and that this announcement does not omit anything likely to affect the importance of such information.