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Johannesburg - Tsogo Sun Holdings, the gaming company controlled by SABMiller subsidiary Southern Sun, and empowerment giant Hosken Consolidated Investments (HCI), has increased its stake in rival gaming group, Gold Reef Resorts, to 23%.
In September last year, Tsogo Sun Holdings bought around 42 million shares in Gold Reef Resorts - equivalent to 15% of the company's issued shares - from various empowerment shareholders.
It seems, judging from comments accompanying Gold Reef Resorts' year to end-December results on Monday, that Tsogo has since bought an additional 8% stake on the open market.
Last year Tsogo was identified as a potential bidder for Gold Reef Resorts after a deal with a private equity consortium stumbled at the eleventh hour.
Formal deliberations between Tsogo and Gold Reef Resorts came to naught, but it seems the former is still stalking the latter with enthusiasm.
While Tsogo is now one the biggest single shareholder in Gold Reef Resorts, Steven Joffe, CEO of Gold Reef Resorts, was not overly concerned around possible hostilities.
He pointed out that between Casinos Austria (a 20% shareholder), the Krok family (25%) and management (6%) Gold Reef Resorts could count of shareholder support that exceeded 50% of the issued shares.
"Ultimately, Tsogo Sun will have to speak to us."
Joffe noted that directors had approached Tsogo Sun when the group was still finalising the purchase of the its initial 15% stake in Gold Reef Resorts. "We asked whether they would put in a bid for the company, which they didn?t do?"
Gold Reef directors, however, expressed concern the company?s empowerment status had now been compromised.
They pointed out that Tsogo Sun - on a pure flow through principle ? was less than 50% black owned.
Directors noted: "Gold Reef has petitioned the gaming boards to confirm that the various empowerment commitments relating to shareholding specified in the Group's various gaming licenses remain adequate after the Tsogo Sun acquisition."
It will be interesting to gauge whether Tsogo Sun will continue to gradually build its stake in Gold Reef Resorts with regular open market forays, or go all-out with an offer to all shareholders.
Taking things to their logical conclusion, the merged operations of Tsogo Sun and Gold Reef Resorts would no doubt require the selling off of a couple of provincial casino licences.
Both Gold Reef Resorts (Gold Reef City and Silverstar, Krugersdorp) and Tsogo Sun have large Gauteng presences. The groups also overlap in KwaZulu-Natal (where Gold Reef resorts operates the Golden Horse in Pietermaritzburg and Tsogo operates the SunCoast casino in Durban) and in the Eastern Cape (where Gold Reef Resorts operates the Queens casino in Queenstown and Tsogo runs the Hemmingways casino in East London).
More on Gold Reef Resorts results will be available on Fin24 during the course of the day.
- Fin24.com
