More nods for Gold Reef, Tsogo merger
Johannesburg - Gold Reef Resorts [JSE:GDF] and Hosken Consolidated Investments [JSE:HCI] announced on Friday that the proposed merger between Gold Reef and Tsogo Sun Holdings had received regulatory approvals from the Mpumalanga Gambling Board and the Western Cape Gambling and Racing Board.
HCI has a 51% interest in Tsogo.
The Gauteng Gambling Board and the KwaZulu-Natal Gambling Board granted approvals on November 15.
However, these approvals are still subject to the Competition Tribunal ruling on the deal.
The tribunal will next week hear the matter between the two national casino operators.
In terms of the proposed transaction, Tsogo Sun will acquire Gold Reef Resorts.
The Competition Commission assessed the merger to determine if the tie-up would substantially lessen competition in the casino gaming market in Gauteng.
The commission alleges that Tsogo's Silverstar, in particular, offers a competitive alternative to Montecasino and the merger would lead to the elimination of Silverstar as a competitor.
The commission said that in the absence of competition, this would give the new merged entity an incentive to raise prices or degrade its product offerings.
The commission has therefore recommended that the tribunal approve the merger between Tsogo Sun and Gold Reef Resorts, on condition that Tsogo Sun sell off Silverstar Casino.
The two parties have argued that the casinos draw customers from their local catchment areas and therefore do not compete with each other.
They have opposed the disposal of Silverstar, and said the merger would not result in a reduction of competition.