Canal+ (CAN), the largest of a trio of businesses spun out of French media and telecoms giant Vivendi (FR:VIV) in December, had a rough debut on the London Stock Exchange. Its shares tumbled by more than a fifth on the first day of trading, leaving it with a market capitalisation just shy of £2.3bn. The pay-TV and film production group hasn’t fared much better since.
There are plenty of reasons why initial public offerings disappoint, but in Canal+'s case, poor timing was a big factor. Not only is the company’s core business in France unprofitable on a net basis, but it recently lost its distribution deal with Disney+ and is caught up in a VAT tax dispute with the French government that could potentially cost it more than €650mn (£549mn).
However, perhaps the biggest uncertainty for investors is a high-stakes takeover that is still in flux. Canal+ has been buying up shares in Africa’s largest pay-TV operator, MultiChoice, over the years, finally hitting 35 per cent in February last year and bringing on a mandatory bid to take full control of the company. The $2.9bn (£2.35bn) deal has yet to receive the green light from regulators but is due to close in April.