In dramatic news relating to the South African gambling industry, it was announced that Sun International will purchase the casino resort group Peermont. The price tag on this deal, according to Fin24, is a hefty R9.5 billion and will afford the group 100% ownership of Peermont.
The deal to acquire Peermont comes as Sun International continues in its strategy to enhance and leverage its existing portfolio. The group reiterated recently its intent to seek out new growth opportunities in South Africa and abroad. Its medium term objective is to create a more solid group with fewer assets, which were larger and of high quality.
Sun International will fund the buy by rolling over R3.9 billion worth of Peermont’s senior debt. It would also take on a fresh facility of R575 million, it said.
Regulators were told that Sun International also plans to issue 10.5 million shares at R120 each to Peermont shareholders, while a rights offer of R375 billion would also be issued.
Sun International plans to dispose of some of Peermont’s smaller assets after the deal is closed, which should bring in more revenue.
Peermont is considered a strong African player in the casino and hospitality industry, with nine casino resorts in South Africa and Botswana. Its most popular property in South Africa is the Emperors Palace casino and resort, the group’s flagship casino and an attractive destination for Gauteng gamblers.
“The acquisition of Emperor’s Palace provides Sun International with an opportunity to increase gaming revenue from Gauteng, being the provincial jurisdiction, with the highest gambling spend in South Africa,” said the group in a statement today. Sun International noted that Emperors Palace is considered one of the country’s largest casinos and has an attractive profile.
“As a result of the proposed transaction, Sun International’s portfolio of South African assets will be further diversified,” said the group.
Because of this diversification, Sun International will not rely so much on its Grand West property in the Western Cape.
“The Peermont portfolio of assets also opens the possibility of further restructuring of local assets, with a medium term objective of creating of portfolio of fewer, larger, quality assets,” it said.
Sun International believes that the transaction and the possibilities that come with it could further enhance its position and scale in the South African market as a leading hotel, resort and gaming operator.