MultiChoice and Canal+ come up with strategy to allow buy-out of the DStv owner

Stephen Grootes interviews Duncan McLeod, founder and editor of TechCentral.

The long-running bid by France's Canal+ to take over MultiChoice has resulted in a restructuring proposal which the two broadcasters hope will comply with South African foreign ownership requirements.

Last year, the French media giant made a mandatory offer to acquire the MultiChoice shares it does not own, at R125 per share.

On Tuesday, Canal+ and MultiChoice outlined in a SENS statement the post-transaction structure of the DStv owner to work around or comply with South Africa's economic empowerment (BBBEE) laws.

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This will entail carving out the local licensed operation from the MultiChoice group into a new entity called LicenceCo, explains TechCentral's Duncan McLeod.

"There will be a different set of shareholders including former Telkom CEO Sipho Maseko through Afrifund Investments and Sonja de Bruyn’s Identity Partners... which will be majority black owned and managed."

Duncan McLeod, Editor - TechCentral

MultiChoice’s empowerment scheme, Phuthuma Nathi, will ultimately hold a 27% economic interest in the South African entity.

"Although Canal+ POST-acquisition will own a 49% economic stake in this new business now called LicenseCo, they' have only a 20% shareholder's voting rights, which is the limit provided for in the Electronic Communications Act."

"If there are changes to the broadcasting legislation, then down the line Canal+ will presumably have the option to buy out or buy a greater stake in this entity called LicenceCo."

Duncan McLeod, Editor - TechCentral

'Canal+ has placed Broad-Based Black Economic Empowerment at the heart of the transaction', is the assurance from Canal+ CEO Maxime Saada.

Nonetheless, the proposed restructuring will be looked at very carefully by both communications regulator Icasa and the Competition Commission, Mcleod says

Scroll up to the audio player to hear more detail from Mcleod