On 18 December 2023, Sun International announced that it has entered into an agreement with the shareholders of Peermont Holdings Proprietary Limited, a leading hospitality and entertainment group which includes the flagship Emperors Palace Resort, to acquire all of the issued ordinary shares and any claims on loan account against Peermont Group.
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 Groupโs operations, including hotels and resorts, as well as the online sports and gaming business, creating large-scale benefits for Sun International.
In alignment with Sun Internationalโs strategy, the proposed acquisition will further enhance the Groupโs online business platform with opportunities for growth by extending Sun Internationalโs proven SunBet management teamโs reach across the Peermont Groupโs assets. In addition, extending the Groupโs omnichannel strategy across a scaled customer base unlocks operating leverage across revenues, marketing reach, payment processing efficiencies and game liquidity.
South-African focused
Sun International CE, Anthony Leeming, says, โSun 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 Groupโs 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.
โThe addition of Peermontโs 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.”
โThe addition of Peermontโs 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 Groupโs 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.
โThe Peermont Groupโs entrepreneurial management team has been a significant factor in its success and the shared expertise of the staff and management of the combined group will result in mutual benefits and efficiencies. Further, we are encouraged that the proposed transaction creates more opportunities for our staff to develop and grow within the combined group.
โWe will leverage off combined synergies to drive margin enhancement and capital efficiency. Importantly, we are in a position to conclude a transaction of scale, rapidly de-gear and maintain a dividend pay-out as a result of the Groupโs excellent recent performance and strong financial position thereby benefiting our locally empowered South African shareholder base.โ
Estimated sale of just over R3 billion
The exact purchase consideration payable in cash to the sellers will be determined with reference to an enterprise value of the Peermont Group of R7.3 billion, less net debt and certain sellersโ transaction costs and subject to capital expenditure and working capital adjustments, if applicable, calculated at the closing date of the proposed transaction, estimated to amount to approximately R3.236 billion as at 30 September 2023.
Implementation of the agreement is subject to the fulfilment of conditions precedent standard for a transaction of this nature, including approval by the relevant Competition Authorities, the Gauteng Gambling Board and Sun International shareholders.
Sun International Chairman, Sam Sithole, says, โSun International has already received written indications of support from shareholders holding approximately 63% of the issued shares of the group, underlining the confidence that our shareholders have in the management team as well as their support for the proposed transaction.
โEchoing this sentiment, the Board believes that the combined group provides a compelling equity story, through increased scale, a larger enterprise value and greater capital markets visibility and is confident that the management team will deliver on the strategy.โ
About the Peermont Group
Founded in 1995, the Peermont Group has developed an excellent track record in the design, development, management, ownership and operation of multifaceted integrated resorts, including hotels, casinos, convention centres, retail centres, health spas, restaurants, bars and other sport and entertainment facilities, including the development and management of the impressive Emperors Palace.
Collectively, the Peermont Groupโs physical properties offer 3 349 slot machines, 152 gaming tables and 1 636 hotel rooms in South Africa and Botswana.
The largest casino in the Peermont Group is the Emperors Palace Hotel Casino Convention and Entertainment Resort which is a leading gaming destination in Gauteng, offering a world-class casino property, complemented by four unique hotels, a health and beauty spa, various dining options, entertainment venues, including a state-of-the-art cinema complex, and world-class conference facilities.
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