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Cape Town - Empowerment giant Hosken Consolidated Investments has taken another tilt at gaming group Gold Reef Resorts (GRR) in a R942m transaction.
According to a SENS announcement on Thursday evening, HCI's 38% held gaming subsidiary Tsogo Sun Holdings has increased its stake in GRR from about 5% to almost 20% by buying out 42m shares from an array of empowerment shareholders.
The deal was struck at 2 250c/share - a marked premium to GRR's ruling share price of 1 650c. The premium is perhaps understandable as Tsogo Sun Holdings is effectively taking a major position in one of its biggest rivals.
Tsogo Sun Holdings was in unsuccessful buyout talks with GRR earlier this year after an initial takeover bid (pitched in late 2007) by an Ethos private equity consortium fell away. The Ethos buyout bid - which was challenged by Tsogo Sun Holdings - was pitched at 3400c/share.
The latest Tsogo tilt deal gives HCI an effective 7.5% stake in GRR. However, Tsogo Sun Holdings will not become the biggest shareholder in GRR. The biggest shareholder remains Casinos Austria with a stake of around 27%.
In Thursday's announcement HCI reiterated its intention to increase its investment in gaming related activities. It seems possible that HCI and Tsogo may approach other GRR shareholders in a bid to bolster the stake in the gaming group further.
But whether HCI is intent on pushing for a merger of GRR and Tsogo Sun is not clear at this point.
The transaction, of course, depends on Tsogo Sun Holdings successfully applying for approval to the relevant provincial gaming boards.
This may not be a cinch seeing as there is considerable overlap in the gaming operations of Tsogo Sun and GRR - especially in Gauteng where the former operates Montecasino and the latter operates Gold Reef City. GRR also operates the Silverstar casino on the West Rand.
There is also a significant overlap in KwaZulu-Natal, where GRR operates the Golden Horse in Pietermaritzburg and Tsogo operates the Suncoast casino.
GRR's other casinos include Mykonos on the Cape west coast, the Garden Route casino, the Gold Fields casino in Welkom and the new Queens casino in the Eastern Cape.
Aside from its major investments in Gauteng and KwaZulu-Natal, Tsogo operates smaller gaming venues like Hemingways in East London, The Ridge casino in Witbank and the Emnotweni casino in Nelspruit.
- Fin24.com