Tsogo Sun Holdings, a major South African hotel and casino operator, announced on Friday that it had canceled its plans to purchase a minority stake in two casinos operated by rival Sun International.
The R2.1 million acquisition deal was first announced in May 2014. Back then, Tsogo Sun said that it was interested in purchasing a 40% stake in Sun International’s subsidiaries SunWest, which runs GrandWest Casino, and Worcester Casino, which runs Golden Valley Casino. Both gambling properties are located on the territory of the Western Cape province.
Tsogo Sun was to acquire the 40% stake from Sun International and Grand Parade Investments. To be more precise, the gambling operator was to purchase a 25.1% stake in the two casinos from Grand Parade Investments for the amount of R1.55 billion, and a 14.9% one from Sun International for the amount of R635 million.
Currently, there are five casinos on the territory of the Western Cape province. Two of those are the above-mentioned venues operated by Sun International and the other three are owned and run by Tsogo Sun.
Earlier this year, the Competition Commission of South Africa recommended to the country’s Competition Tribunal that the acquisition deal between the two major gambling operators should be prevented from being completed. Officials voiced concerns that if Tsogo Sun purchased the two casinos, this would result in competition in the region being blunted.
They also pointed to the fact that the coordination between Tsogo Sun and Sun International would eventually lead to casino visitors being offered lower-quality services at higher prices.
The two operators appealed the Competition Commission’s claim that the proposed transaction should be terminated. Even though the country’s Competition Tribunal is yet to announce its final decision on the matter, it seems that the purchase would not take place after all.
The deal was expected to be completed before May 31, 2015. However, the originally agreed date was later extended by the two companies to August 31, 2015. Tsogo Sun said in a Friday statement that the new date cannot be achieved and that the two parties had decided to terminate the transaction.
Both companies have started withdrawing the applications they had filed to the relevant regulatory bodies.
As previously reported, up until recently, South Africa had three major gambling operators. However, Sun International purchased the Peermont Group for R9.4 billion, thus turning itself into Tsogo Sun’s sole competitor.
