A French firm, Canal Plus, has disclosed plans to purchase over 60 per cent shares of South Africa’s Multi-Choice Group to take ownership of the company.
According to Reuters, the deal, which is valued at roughly $1.7billion, would see Canal Plus paying 105 rand in cash per share.
The report, which quoted a statement by the company, noted that the move was to strengthen its hand in a competitive international pay TV market.
It stated that Canal Plus, a top shareholder in MultiChoice with a 31.67 per cent stake, made a non-binding and indicative proposal but will deliver a letter of firm intention to MultiChoice’s board once due diligence has been completed.
The proposal saw shares in MultiChoice surged in trade but remained below the offer price. They were last up to 24.83 per cent at 93 rand.
MultiChoice, which operates in 50 countries in sub-Saharan Africa, said it had received a letter from the French media company and would update shareholders on any development.
An equity research analyst at Avior Capital Markets, Michael Steere, said that while a merger offered benefits of scale, the proposed price “materially undervalues the group.”
“For MultiChoice to continue to thrive in Africa, it will require a strategy that enhances its scale, as well as strengthen local and global expertise. Our potential offer, if successful, would be an important next step for MultiChoice to realise its full potential,” the chairman and chief executive offer of Canal Plus, Maxime Saada noted in a statement.
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