According to the South African founded Sun International hotel and casino brand, the local gambling market is so mature that the company needs to focus on other markets, such as interests in South America. The company announced this week that it would be forging further into the Latin American gaming industry by purchasing an additional 54.7% stake in the Chilean Monticello Grand Casino and Entertainment World. This gives Sun International a 98.8% holding in the company, making it effectively theirs.
The acquisition of a majority share of Monticello came after nine long months of negotiations, with the deal thought to be worth R1.2 billion and another R340 million through shareholder loans and cash.
Sun International, not a believer of leaving all one’s eggs in the proverbial basket, first looked at Latin America’s market in 2007, when it bought a 40% stake in the project near Santiago, Chile. The resort boasts nearly 2,000 slot machines, 80 table games and 300 bingo stands. Sun International has been responsible for the development and management of the resort from the word go, and will continue to run it through the new deal. It will, of course, cease to receive management fees.
Sun International has a powerful presence in the South African gambling market, however it considers the industry mature, with 38 out of the available 40 gambling licenses already allocated and auctioned. In the past year, Sun International has focused on drawing out as much as possible from its South African interests, such as the potential relocation of the Morula Casino to Menlyn in Pretoria. The Gauteng Gambling Board has still not given its final decision about Sun International’s appeal to relocate the casino.
The group’s chief executive, Graeme Stevens has said that Sun International does not intend, at this point, to split revenue from local and offshore assets. He also stated that Sun International will continue to keep its eyes open for lucrative acquisition deals.
Sun International needs to sell its international growth plan to shareholders; however it seems that because it isobvious that South Africa’s casino market is so mature, it only makes sense to seek out other markets where momentum is growing.