Sun International said on Monday that it has bought Peermont Holdings, a well-known firm in the hotel and entertainment industries, for R7.3 billion. The acquisition includes the flagship Emperors Palace Resort. The company said the acquisition will expand the group’s online business platform.
The shareholders of Peermont have agreed with Sun International, a hotel, gaming, and entertainment group that owns Sun City Resort and The Table Bay Hotel on the V&A Waterfront, to purchase all of the issued ordinary shares and any claims on loan accounts against Peermont Group.
Investors in the group supported the purchase, with written support from 62.54% of shareholders. According to Sun International, the deal would “enhance the quality of earnings and cash flow generation” for the company.
The Maslow in Sandton, the Wild Coast Sun in the Eastern Cape, the Table Bay Hotel, and Sun City in the North West are the four resorts and hotels in South Africa that are managed by Sun International, a company valued at approximately R11 billion on the JSE. It also runs nine urban casinos, including GrandWest in the Western Cape and Carnival City in Gauteng, with at least one in every province but Mpumalanga. SunBet is another of its online offerings.
Emperors Palace comprises a substantial share of the Peermont portfolio and is one of Gauteng’s top gaming destinations. It is augmented by four hotels, a spa and wellness center, food and entertainment options, and a movie theater.
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In a statement Sun International said,
“The acquisition represents a unique opportunity for Sun International to acquire a group of gaming and hospitality assets of significant scale and quality, together with operating one of the largest, most cash-generative, high-quality casinos situated in a major metropolitan area.
“With its unique proximity to the OR Tambo International Airport, Emperors Palace offers a gateway to high net-worth customers from the rest of Africa and abroad. This customer base will drive opportunities for synergies with the rest of the Group’s operations, including hotels and resorts, as well as the online sports and gaming business, creating large-scale benefits for Sun International.”
The Peermont Group was established in 1995 and has physical locations in South Africa and Botswana with 3,349 slot machines, 152 gaming tables, and 1,636 hotel rooms.
Sun International has, over the last six years, repositioned itself from a highly geared hospitality and gaming group operating across several regions in Africa and Latin America, to a simplified and locally empowered South African-focused, cash generative business with disciplined capital allocation principles. The Group’s strong performance over the past two years has increased available capital for the Group and put us in the enviable position of being able to consider value accretive acquisitions at an attractive point in the cycle.
The addition of Peermont’s land-based casinos to our portfolio, underpinned by the flagship Emperors Palace Resort, will enhance the quality of earnings and cash flow generation of the Group. This is consistent with the Group’s strategic intent to focus its portfolio on large urban casinos with the ability to drive value-enhancing strategies across smaller regional assets and online growth
Anthony Leeming, CEO Sun International
Sun International laid down the purchase price and stated that it would be based on an enterprise value of R7.3 billion, subject to certain restrictions, such as the company’s expected profit margin. In addition, Sun International would take on debt that was valued at R4 billion at the end of June, bringing its total amount of debt in South Africa to more than R13 billion.
