South African casino operators Tsogo Sun and Sun International were announced to have cleared an important hurdle in the proposed plan for Tsogo Sun’s acquisition of a 20% stake in two Western Cape casinos.
Sun International commented that shareholders in its employee trust scheme had given the green light to the proposed transaction. Thus, Tsogo Sun has been cleared the way to acquire a stake in Sun International subsidiaries SunWest International and Worcester Casino that currently run GrandWest Casino and Golden Valley Casino in the Western Cape region.
Under the ownership reshuffle plan, Tsogo Sun is to buy a 10% stake in Sun International for the amount of R675 million and a 10% interest from Sun International’s empowerment shareholders scheme Grand Parade Investments for another R675 million. Sun International has revealed that is rival gambling operator has already made an initial payment of R35.7 million.
An approval from the employee trust scheme was needed as in this way the deal will have its pre-emptive rights waived. And approval now needs to be given by Grand Parade shareholders. This is expected to happen by the end of June.
If the transaction eventually gets completed, Tsogo Sun will expand its presence in the Western Cape region. The deal was first announced in 2014 but competition authorities recommended its termination last year.
Under the original plan, Tsogo Sun would have acquired 40% in the two Western Cape casinos for the amount of R2.2 billion. The gambling operator, which already manages three casinos in the area, would have been given a control over all five Western Cape casino licenses. In order for the South African competition authorities’ terms to be satisfied, the plan was restructured and Tsogo Sun proposed to buy a 20% stake in the two gambling venues, instead.
However, the gambling operator will not have representatives on the boards of both SunWest International and Worcester Casino and will not have any influence over the two Sun International subsidiaries’ management.
People with knowledge of the matter have suggested that Grand Parade would not reject the proposed transaction as it had formerly pointed out that it would like to focus its attention on the provision of food services and would be able to do this by selling its casino interests.
