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MultiChoice Group broadcasting company in South Africa reportedly ended the acquisition talks with Vivendi's Canal Plus, a French premium television channel, by rejecting its buyout offer. The company also operates the DStv satellite television service, and on Monday, Feb. 5, it confirmed that talks with Canal+ concluded without a deal.
MultiChoice further said it would no longer engage in discussions with Canal Plus as its board concluded that the offer remarkably undervalues the company's worth. The French channel is reported to be a major stockholder in MultiChoice, and late last week, it proposed to buy shares it does not own yet for $5.55 per unit, as per Reuters.
Low Acquisition Offer
Moreover, Canal Plus said the bid was worth 31.7 billion in South African rand. It was also a 40% premium to MultiChoice's closing share price of 75 SA rand based on Jan. 31st rates. In a recent review, the broadcasting firm said the company was valued way above the offered price.
At any rate, while it rejected Canal Plus' bid, the board will remain open to third-party groups that will pay a fair acquisition price. MultiChoice said, "Therefore, while the board is open to all means of maximizing shareholder value, it has conveyed to Canal+ that at this proposed price, the letter does not provide a basis for further engagement."
Vivendi's Canal Plus' Existing Stake in MultiChoice
News24 reported that Canal+ already owned 30% of the company's shares before bidding to buy more in MultiChoice. It is the largest stakeholder, followed by the Public Investment Corporation, which owns more than 12%.
If MultiChoice approves the company's bid, its shares will go up, but it does not mean that its level of voting rights will also increase. This is because the Electronic Communications Act in South Africa imposes limitations on foreign ownership of domestic broadcast licenses, so even if it purchases more stocks, its voting rights will remain to a maximum of just 20%.
Photo by: Canal+ Group Newsroom
