One of the world’s largest beer companies, SABMiller, confirmed yesterday that it would be selling its stake in the local hotel and casino group, Tsogo Sun Holdings. SABMiller embarked on a strategic review of the deal before reaching its decision, it said on Monday. The brewer predicted that its nearly 40% stake in the South African casino group was worth about R11.7 billion. Most of the stake would be sold to institutional shareholders via a private placement. A third will be sold back to Tsogo Sun in the form of 130 million shares. Shareholders for the casino group still need to give the green light for that part of the deal.
Explaining SABMiller’s reasoning behind its decision to sell its stake in the Tsogo Sun Holdings empire, the Chief Executive of the group, Alan Clark said: “Gaming and hotels are not core to our operations and we have concluded that the time is right for us to exit our investment.”
The money earned from the sale of SABMiller’s stake in Tsogo Sun Holdings would be reinvested in its “core growth businesses, including our African businesses,” according to Clark.
SABMiller, the world’s second largest beer company, employs around 70,000 people around the world in dozens of countries. Based in London, the group posted revenues of $26.7 billion (R267 billion) last year.
SABMiller first bought a stake into the company in 2002, but in April this year announced that it would be making a strategic review of its investment. Despite their decision to sell their stake in Tsogo Sun Holdings, SAB Miller admitted that “the business has performed well over the years.”
Shares of Tsogo Sun Holdings dropped 3.8% in Johannesburg today, with shares of its largest shareholder, Hosken Consolidated Investments down by 0.5%.
According to the company, Tsogo Sun Holdings is considered “Southern Africa’s premier gaming, hotel and entertainment group, listed on the JSE and a company of unparalleled variety, footprint and scale.”