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MultiChoice Group and its French suitor, Groupe Canal+, have approached South African regulators, including the communications regulator, Icasa, seeking to have their proposed merger consummated.
Canal+ has offered to pay MultiChoice shareholders R125/share in cash.
In a statement to investors, the companies said that on Monday they “made a joint merger control filing pertaining to the offer to the Competition Commission as required by the Competition Act”.
“Canal+ and MultiChoice are also engaging with the Independent Communications Authority of South Africa and other regulatory authorities.”
They said that in terms of the Competition Act, the transaction is classified as a “large merger”, which requires approval by the Competition Tribunal. “Accordingly, the Competition Commission will consider the filing and refer its recommendations to the tribunal,” the statement said.
“Given the regulatory processes underway, Canal+ and MultiChoice will provide MultiChoice shareholders with further updates and details in due course.”
The merging parties are likely to encounter stiff resistance to their plans from both the competition regulators and Icasa. The latter must decide whether the foreign ownership restrictions in the Electronic Communications Act warrant blocking the deal.
Stumbling block
There’s still no detailed clarity on exactly how they intend to navigate the restriction, which prohibits foreign entities from holding more than 20% of the voting rights of a South African broadcaster.
This restriction in the ECA may prove to the biggest stumbling block in the way of consummating the deal between the two companies.
In June, the parties said they would work to navigate the ECA restriction.
Read: MultiChoice suitor Canal+ to pursue London listing
“In light of the duty on Canal+ to make a mandatory offer for the MultiChoice shares, Canal+ and MultiChoice are in the process of assessing and finalising suitable structuring options and potential transactions, which may be undertaken by the MultiChoice Group on or shortly before the closing date to ensure compliance with the applicable limitations on foreign control while also maintaining MultiChoice’s broad-based black economic empowerment credentials,” they said, without elaborating.
The parties have given themselves until April next year to finalise the Canal+ offer to MultiChoice shareholders, allowing them time to figure out the best way of achieving this outcome.
But they’ve hinted at how they intend to deal with the ECA foreign ownership restriction.
“In terms of the cooperation agreement … MultiChoice shall take such actions or series of actions as may from time to time be agreed in writing between Canal+ and MultiChoice to ensure compliance by the MultiChoice Group upon closing date with the ECA and certain other applicable laws and regulations promulgated under the ECA and the Icasa Act.” — © 2024 NewsCentral Media
