MultiChoice Rejects a $2.5 Billion Offer From Canal+ to Buy Company

MultiChoice, a pan-African pay-TV, has turned down the recent offer from Canal+, one of its largest shareholders, on plans to acquire the Company for $2.5 billion.

The TV company made this announcement today after it released a notice to shareholders. According to the released notice, the Company said the rejection follows the price at which Canal+ offered to buy the Company for R105 ($5.6) per share, undervaluing the multibillion-dollar Company.

According to the report from MultiChoice, Canal+ currently holds 35.01% of the Company's total ordinary shares in issue.

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The Reason

MultiChoice further explained why they turned down one of their biggest shareholder's offers to acquire the Company for $2.5 billion. Multichoice recently conducted a valuation, showing its share unit is worth more than R105.

It reads,

• After careful consideration, the Board has concluded that the proposed offer price of R105 in cash significantly undervalues the Group and its prospects. The Board has reached this conclusion, taking into account all relevant considerations, including the following:

• MultiChoice has recently conducted a valuation exercise, which has valued MultiChoice significantly above R105 per share.

• MultiChoice's valuation excludes any potential synergies that may arise from the envisaged transaction.

• In this regard, Canal+ has, following the lengthy discussions between the parties, repeatedly conveyed to the public what it sees as the advantages of the combined entity and, therefore, seemingly takes the view that there are significant synergies. These synergies need to be factored into any fair offer made by Canal+.

The Company's Board noted that while it is open to all means of maximising shareholder value, it has conveyed to Canal+ that, at this proposed price, the letter does not provide a basis for further engagement.

"Caution is accordingly no longer required to be exercised by shareholders when dealing in their securities. In keeping with its duty to act in the Company's best interests, the Board remains open to engaging with any party regarding any offer for a fair price, subject to appropriate conditions. Moreover, the Board will continue to act by its duties under the applicable provisions of the Takeover Regulations regarding any formal and binding offer," the Company added.

Back Story

It has been reported that Canal+, a French company, has proposed plans to acquire MultiChoice for around $2.5 billion.

The Company submitted a non-binding indicative offer to MultiChoice's Board to acquire all ordinary shares it does not own, subject to the necessary regulatory approvals.

For each share, Canal+ offered R105 per share, which represented a premium of 40% to MultiChoice's closing share price of R75 on January 31.

Canal+ said that if MultiChoice is successfully acquired, the firm will work tirelessly to turn the South African pay-TV giant into a global-scale media company.

In its last annual report, MultiChoice announced that Canal+ owned 140,160,277 of its 442,512,678 issued shares.

Reports from local media reveal that Canal+ has been actively buying MultiChoice shares on the open market for the past four years, leading to the Company holding over 30% of the company-issued shares.