Company Data
| Last traded |
R128.19 |
| Change |
R0.20 |
| % Change |
0.16% |
| Cumulative volume |
1.80m |
| Market cap |
R92.88bn |
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Johannesburg - Gaming and leisure company Gold Reef [JSE:GDF] has agreed to merge with unlisted Tsogo Sun Holdings, to form the largest South African gaming group in a deal valued at R17bn.
The transaction will also see the new firm join the JSE's 40 largest counters.
Gold Reef will issue nearly 900 million shares at 1 925 cents per share to Tsogo Sun backers: Hosken Consolidated Investments-controlled Tsogo Investment Holding (TIH) - which owns a 51% stake - and brewing giant SABMiller.
This gives TIH a total 41.3% shareholding in Gold Reef, triggering a mandatory takeout offer for Gold Reef's other shareholders.
However, the Securities Regulation Panel has agreed to waive the mandatory shareholder offer "as a consequence of the implementation of the proposed transaction and/or by reason of the conclusion of a shareholders' agreement entered into by the Tsogo shareholders".
Said HCI: "The merger will create not only a premier gaming and hotel company in South Africa, but a business of significant ranking among Europe, the Middle East and Africa's largest listed gaming and hotel groups."
It said the merged entity will have an improved ability to attract new talent and resources, and to capture opportunities in the local and international gaming and hotel sectors both in terms of organic growth and acquisition.
Competition issues to sort out
Tsogo Sun operates the Holiday Inn, Garden Court and Southern Sun hotel chains as well as seven casinos, including the Emnothweni Sun in Nelspruit and Montecasino in Johannesburg.
Tsogo Sun said it expects to operate 90 hotels by the end of this year, with nearly 14 500 hotel rooms across Africa and the Middle East.
With a JSE market capitalisation of R6bn, Gold Reef currently owns the Gold Reef City Casino and the Silver Star Casino, among others.
The transaction will propel the new Gold Reef into the JSE's top 40, dwarfing the currently dominant Sun International.
However, the transaction has to pass a few tests before it can go ahead. First, Tsogo Sun has to get Gold Reef shareholders to waive the mandatory takeout triggered by its resultant 41.3% ownership.
Then it has to satisfy industry and competition authorities that the new firm's dominant position will not be detrimental to the gaming industry.
Competition concerns may also compel the new company to shed some of its gaming casinos - especially in Gauteng where both already enjoy a dominant position with Montecasino and Gold Reef City ownership - as well as the Sandton Convention Centre and Galllagher Estates conference centre.
- Fin24.com