MultiChoice finds itself in a significant regulatory conundrum following a recent acquisition by French media company Groupe Canal+ SA (“Canal+”). The acquisition has triggered a mandatory offer requirement, compelling Canal+ to make an offer to all holders of ordinary shares in MultiChoice.
Background
In an announcement dated February 5, 2024, MultiChoice revealed that Canal+ had acquired additional shares in the company, bringing its total interest to 35.01% of MultiChoice’s total ordinary shares. MultiChoice, in accordance with regulatory requirements, sought a ruling from the Takeover Regulation Panel (“TRP”) to determine whether Canal+ was obligated to make a mandatory offer to all shareholders.
TRP Ruling: On February 27, 2024, the TRP issued a ruling stating that Canal+’s acquisition of 35.01% of the voting rights in MultiChoice indeed triggered the mandatory offer requirement under section 123 of the Companies Act. Consequently, Canal+ is obliged to proceed with making the mandatory offer promptly, adhering to the stipulations outlined in the Act and related regulations.
Compliance Notice and Appeal: However, the publication of the initial announcement by MultiChoice regarding Canal+’s acquisition was deemed unlawful by the TRP, as it occurred without the TRP’s approval, contravening statutory provisions. Consequently, a compliance notice was issued against MultiChoice. MultiChoice has since lodged an appeal and review with The Takeover Special Committee, challenging the TRP’s decision.
Access to Ruling: Shareholders of MultiChoice have been advised by the TRP to access the full ruling regarding Canal+’s mandatory offer obligation on the company’s website.
Implications for Shareholders: The mandatory offer requirement signals a significant development for MultiChoice shareholders. Canal+’s move could potentially impact the company’s ownership structure and strategic direction. Shareholders are urged to stay informed about developments and seek advice from financial advisors or legal experts if needed.
Foreign Ownership Restrictions: In light of certain statutory requirements applicable to South Africa, MultiChoice is permitted to limit the voting rights of shares held by foreigners. This measure is aimed at ensuring compliance with regulatory provisions. Shareholders are encouraged to review the MultiChoice memorandum of incorporation for detailed information regarding these restrictions and their implications.
Conclusion
MultiChoice’s journey through regulatory scrutiny underscores the complexities involved in corporate governance and ownership dynamics. With Canal+’s mandatory offer looming, stakeholders await further developments that could shape the future trajectory of one of South Africa’s leading media companies.
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