SABMiller mulls sale of stake in Tsogo sun

tsogo-sun-logoThe London based brewer, SABMiller, has said that it is mulling the option of selling its stake in the South African hotel and casino chain, Tsogo Sun.  SABMiller owns a stake of just under 40% of the company, which has a market value of approximately $1 billion (R10.9 billion).

SABMiller has held a stake in Tsogo Sun Holdings Ltd. for thirty years.  Four years ago, the brewer merged Tsogo Sun with Gold Reef Resorts and at the time reduced its stake in the company from 49% to 39.6%.

SABMiller recently announced that it was reviewing options that may result in the sale of this 39.6% stake, although it included a disclaimer that reviewing options did not necessarily mean that a sale would follow.

“This investment is not considered to be core to the beverage operations of SABMiller, and therefore SABMiller is reviewing its strategic options for the shareholding,” said the group in a statement.

Tsogo Sun Holdings, the Johannesburg based entity, is considered one of South Africa’s largest gaming, hotel and entertainment groups.  While the majority of its hotel rooms are located in South Africa, it also boasts interest in other African countries, as well as the Middle East and the Seychelles.  All in all, the group operates 14,500 rooms.

Analysts are now predicting which type of company could afford to buy such a large stake at the price that SABMiller’s stake is valued.

According to Cape Town analyst De Wet Schutte for Avior Research: “It’s unlikely that one single entity will take up all those shares, as there’s not a lot of buyers around with that kind of cash and empowerment credentials in place.” Tsogo Sun Holdings’ largest stakeholder is Hosken Consolidated Investments which owns 41% of the company.

Tsogo Sun Holdings put out a statement regarding the potential sale of the group and said that it was “assisting SABMiller with its review.”  The group promised that further announcements would be made to shareholders in due course.

Tsogo Sun opened its first casino in Nelspruit in 1997 and has since grown into one of the country’s leading gaming and entertainment entities.  Its flagship casino is MonteCasino in Fourways, complimented by Gold Reef City in south Johannesburg and Silverstar in Krugersdorp.  Tsogo Sun also owns the Suncoast Casino on Durban’s beachfront and several other key properties.

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