Hosken Consolidated Investment (HCI), the South African empowerment conglomerate, announced that it had obtained a majority stake in the gaming, hotel and entertainment group, Tsogo Sun. HCI increased its beneficiary interest in the group by 7.75% and now has total shareholding of 51.8%.
HCI already had quite a large share of Tsogo Sun stocks before it made the announcement, while it also had a strong representation on the casino group’s board. HCI chief executive, Marcel Golding, as well as HCI chairperson, Elias Mphande are members of Tsogo Sun’s board.
As a result of the announcement, shares for Tsogo Sun climbed to an eight month high of R25.57 on the Johannesburg Stock Exchange, although share prices for HCI actually dipped by just under 0.7% to R143.50.
An investment analyst for Mergence Investment Managers, NolwandleMthombeni noted that HCI would have a higher attribution of earnings from Tsogo Sun.
“This means HCI’s share of Tsogo Sun earnings will be higher going forward,” he said. “Another implication is that they now have a more significant blocking stake in terms of any resolutions that need to be voted on at meetings with the shareholders.”
According to the investor, as a majority shareholder, HCI already has significant influence on Tsogo Sun’s strategy, and the latest transaction will re-affirm the status quo.
In 2017, Hosken Consolidated Investment stated that it would be consolidating its casino assets under Tsogo Sun. The R2.1 billion saw Tsogo Sun take over the gaming machine and bingo hall businesses of Niveus Investments.
Last year, the CEO of Tsogo Sun, Marcel von Aulock quit his role quite abruptly, after working for the company since 1999.
There was much speculation surrounding the reasons for his departure from the group, including differences over acquisitions with the parent company, HCI. According to these rumors, von Aulock wasn’t happy with a deal of selling property to the Hospitality Property Fund.