Vivendi’s Canal+ offers to buy biggest pay-TV group in Africa

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Media conglomerate Vivendi’s Canal+ has offered to buy South Africa’s MultiChoice, valuing Africa’s biggest pay-TV company at $2.5bn in a proposed deal to build a rival to Netflix in the world’s fastest-growing streaming market.

Canal+, which already owns almost 32 per cent of MultiChoice, said on Thursday that it had made a non-binding cash offer to buy the remaining stock at R105 ($5.60) per share.

MultiChoice is Netflix’s biggest streaming rival in Africa via its Showmax platform, but it has had to invest heavily to scale up the service, which it is relaunching this month with investment from Sky and Comcast’s NBCUniversal.

MultiChoice shares rose as much as 27 per cent on Thursday despite the premium of 40 per cent that Canal+ is offering to Wednesday’s closing price.

A takeover would “create an African media business with enhanced scale, which can thrive in a competitive international market”, said Canal+, which Vivendi is preparing to spin off.

But the French company, controlled by billionaire corporate raider Vincent Bolloré, will have to find a way around South African legislation that forbids foreign owners from controlling more than 20 per cent of the voting rights in the country’s broadcasters.

“Canal+ is respectful and observant of all laws and regulations relating to the South African media sector and companies listed on the Johannesburg Stock Exchange,” the company said. “Any firm intention letter submitted would be mindful of the obligations that Canal+ would have in this regard.”

Asked about the voting rights issue by the Financial Times, Maxime Saada, chief executive of Canal+, said “we have taken expert advice on the matter and we believe we have a solution” but declined to provide details.

Canal+ is “actively preparing” to list itself as part of a plan announced in December to split up parent company Vivendi into four entities.

“This project would allow investors to benefit from the merger of Canal+ and MultiChoice, the ultimate objective of the Canal+ Group being to also obtain a listing in South Africa,” the company said.

Vivendi, which owns businesses ranging from TV production to advertising, has long been subject to a conglomerate discount, where the group’s market capitalisation trades at a substantial discount to the total value of its assets.

In a reversal of earlier efforts to convince investors of Vivendi’s synergies, the group said it would take up to 18 months to study the break-up plan when it was announced at the end of last year.

MultiChoice reported a R911mn ($48mn) loss in the six months to the end of September as it scaled up investment in Showmax, but it also battled inflation and economic volatility in big markets such as Nigeria.

MultiChoice’s business dates back to 1985 when South Africa’s Naspers brought subscription television to the continent even before Rupert Murdoch launched Sky in Britain.

Naspers spun off MultiChoice in 2019 as the group, the biggest single shareholder in China’s Tencent, pivoted further to internet businesses. 

MultiChoice had 21.6mn active subscribers on the continent at the end of September. The number in South Africa fell to 8.6mn, a 5 per cent drop on the same period a year before. Canal+ had 8mn subscribers in French-speaking countries, said Saada.

Sky and Comcast took a 30 per cent stake last year in the Showmax streaming venture, which is aiming to reach $1bn in revenue by 2028. The venture partners would have pumped $177mn of equity funding into the platform by the end of March, MultiChoice said on Thursday.

Saada denied that Canal+’s takeover bid was prompted by MultiChoice deepening its ties to other international partners. “Our strategy is not driven by what Comcast is doing,” given that Canal+ had been buying MultiChoice shares for years, he said.

Showmax “goes to prove that MultiChoice has considered that it does not have the scale required to be the full owner of its own technology platform”, he added. 

“We are ready to invest heavily in local production and local sports,” said Saada. As competition in Africa’s streaming market intensified, “production values is really what makes the difference . . . to do that, you need scale”.