Sun International, in a landmark announcement on Monday, revealed a significant deal valued at ZAR7.3 billion (£313 million).
This strategic move has been characterized as a “unique opportunity” by Sun International, as it entails the acquisition of Peermont, a company renowned for its world-class properties and robust cash generation.
Under this agreement, Sun International will gain control of Peermont’s impressive portfolio, comprising 11 properties spread across South Africa and Botswana.
The acquisition also encompasses the popular online sports betting platform, PalaceBet.
Emperors Palace, one of Peermont’s crown jewels, stands as a leading casino resort in Gauteng, boasting an impressive array of entertainment options, including 1,695 slot machines, 69 gaming tables, and 757 rooms.
Sun International highlights the resort’s “unique proximity” to the OR Tambo International Airport, recognizing it as an excellent opportunity to attract “high net-worth customers.”
The decision to pursue this acquisition garnered strong support from Sun International’s investors, with an overwhelming 62.54% of shareholders expressing their written approval.
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The company anticipates that this transaction will substantially augment the quality of its earnings and boost its cash flow generation capabilities.
This strategic move by Sun International comes on the heels of a robust first half of the year.
In its financial report for the six months ending on June 30, the company reported a remarkable 11.6% increase in income, reaching ZAR5.78 billion (£243.7 million/€284.5 million/$305.3 million).
This exceptional growth was achieved despite a challenging economic climate and heightened competition.
Additionally, the group’s adjusted EBITDA for the first half of the year reached ZAR1.57 billion, marking a 5.6% increase over the same period in 2022. Overall profit for the period surged by an impressive 41.0% compared to the previous year, totaling ZAR485 million.
Of note, urban casinos contributed significantly to this success, with their income rising by 4.2% to ZAR3.27 billion, with the casino segment accounting for 91.8% of this total.
Sun International, in its announcement of the Peermont acquisition, emphasized that this strategic move aligns with the company’s intent to focus its portfolio on large urban casinos.
The acquisition had been hinted at in late November when Sun International disclosed discussions regarding a potential acquisition without revealing the identity of the party involved.
Shareholders were cautioned to exercise prudence in trading Sun International securities until further details were provided.
Following the official announcement on Monday, Sun International shares are currently trading at ZAR3,973 (£170/€197/$215) per share, reflecting a 2.24% decrease from the opening price on December 18th.