In February, Canal+’s stake in MultiChoice passed the 35% mark, triggering a law that allowed it to present a mandatory offer to shareholders of the South African broadcaster. While that offer is under consideration, Canal+ has continued to snap up MultiChoice shares on the open market, increasing its stake to 40.8%. 

Between April 12 and 15, Canal+ bought 3.5 million MultiChoice shares at an average price of R116 per share, lower than the mandatory share offer of R125. It continues an almost three-year move by the French broadcaster, which has 8 million customers in Africa, to take over MultiChoice. 

While South African law mandates any entity with more than a 35% stake in a listed company to make an offer for all outstanding shares, another law limits foreign entities’ voting rights in acquired broadcasting companies to 20%. 

As both companies continue to work out how to get a deal over the line despite regulatory hurdles, Canal+ is mopping up shares at a significant discount. If the transaction is finalised, Canal+ will likely have to pay less than its  $1.9 billion offer. Per law, MultiChoice is not allowed to issue any more shares.

“The 3 million shares acquired would have cost R30 million more had they been purchased at the offer price, so Canal+ is saving a lot of money,” said Jimmy Moyaha, founder of investment firm Lebowa Capital. According to Moyaha, MultiChoice shares on the open market are fair play until the deal goes through.

According to South African law, Canal+ can continue buying MultiChoice shares if they are trading at less than the R125 mandatory offer price. If the share price surpasses the offer price, the French broadcaster would have to up its offer price for all outstanding shares.

According to Moyaha, the fact that MultiChoice shares are still trading at a discount to the offer price is a sign that the market is not getting ahead of itself about the takeover deal being concluded. 

Both companies have announced that they will cooperate to see the deal through, with MultiChoice forming an advisory board and Canal+ reportedly in talks with Patrice Motsepe to join the bid.

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