In a statement to the Johannesburg Stock Exchange, MultiChoice expressed its careful consideration and concluded that the cash offer of R105 significantly undervalues the company and its future prospects. This rejection, however, may not deter Canal+, which has been steadily increasing its stake in MultiChoice since 2020. Vivendi, the parent company of Canal+, is experienced in navigating complex takeover scenarios, having orchestrated at least two similar acquisitions in the past.
Read Also: DSTV/GoTV Faces 2024 Price Hike amid Multichoice Financial Strain
Canal+ continues to accumulate MultiChoice shares
The headquarters of Canal Plus, a pay-television unit of Vivendi SA, are seen in Issy les Moulineaux near Paris, France, on Saturday, May 12, 2012. Vivendi SA would stand to boost the lowest valuations of Chief Executive Officer Jean-Bernard Levy’s seven-year tenure by breaking up businesses ranging from phone providers to video games and pay television. Photographer: Fabrice Dimier/Bloomberg
Canal+ continues to accumulate MultiChoice shares, aiming to reach the 35% threshold, as revealed in a regulatory filing observed by TechCabal. According to South African regulations, surpassing the 35% ownership threshold would mandate Canal+ to make a mandatory offer to all MultiChoice shareholders.
In response to these developments, MultiChoice has sought a regulatory ruling regarding the obligation for a mandatory offer to all ordinary shareholders. Additional announcements will be made as the situation unfolds. Meanwhile, MultiChoice’s share price has witnessed a substantial decline of almost 50% in the last six months.
The decision to raise prices
It recently announced plans for further price increases across all its African subsidiaries in 2024. In an interview with Daily Investor, MultiChoice CFO Tim Jacobs referred to the upcoming hike as “inflationary,” citing the company’s financial challenges in maintaining a healthy balance sheet. Jacobs emphasized that these inflation-level price adjustments are essential for sustainable growth and the continuous delivery of high-quality content.
The decision to raise prices stems from concerns about the company’s financial standing, particularly after its latest financial results reflected a downturn. Multichoice experienced a 1% drop in overall revenue to $1.53 billion (R28.33 billion) for the six months ending on September 30, 2023. Additionally, the South African revenue saw a 3% decline. The company reported a loss of $49.2 million (R911 million), a significant decrease from the $3 million (R55 million) profit recorded during the same period the previous year. These financial challenges occurred despite a 4.3% subscription rate increase for DStv packages earlier in the year.
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