Richemont signs agreement to merge its media interests with M-Net

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The Board of Richemont, the Swiss industrial holding company, announces that it has ratified the agreement reached with MultiChoice/M-Net of South Africa consolidating the subscription television operations of both groups into a new jointly-controlled company, Network Holdings (“Nethold”). While announcement of this transaction was made in December 1994, formal agreements were signed this week in Amsterdam by the respective principals. The new structure takes effect from 31 March 1995.

In addition to FilmNet, MultiChoice Europe, ProNet and Irdeto, which were already under joint control, Richemont contributes its 25% of the Italian pay-TV company, Telepiù, while MultiChoice/M-Net all of its subscriber management business as well as a 20% interest in M-Net and Orbicom, a South African broadcast signal distribution company. The new company operates in over 43 countries in Europe and Africa and serves over 2.4 million premium subscribers.

Telepiù broadcasts two premium encrypted pay-TV channels featuring movies and sports, and one unencrypted channel featuring principally documentary and cultural programmes. It currently has over 650,000 subscribers in Italy.

FilmNet broadcasts five pay-TV channels in Holland, Belgium, Denmark, Sweden, Norway and Finland and has over 800,000 subscribers. FilmNet recently launched pay-TV channels in Central Europe and Greece. MultiChoice Kaleidoscope is the subscriber management business which serves FilmNet and other encrypted channels, and Irdeto is a company specialising in encryption technology and digital development.

M-Net, a premium movie and sports channel, is broadcast to 32 countries on the African continent. MultiChoice serves over 930,000 subscribers in South Africa, Ghana, Nigeria and Egypt, amongst other African countries.

The transaction results in the formation of a clearly defined group with aligned shareholder interests and a unified management structure. It will be able to compete in a market which is increasingly characterised by globalisation and the convergence of various industries. The new group will be able to bring leading technology to all its markets and extract cost savings and synergies in its business. The restructured group will also have sufficient financial and managerial resources to exploit new opportunities.

Richemont is a Swiss holding company which exercises financial and operational control over companies operating primarily in the fields of tobacco and luxury goods. In addition, Richemont holds investments in associated companies operating in the electronic media and direct marketing industries. Richemont is quoted on the Zürich, Geneva and Basle Stock Exchanges.

The corporate structural changes are set out in the annexure hereto.