SABMiller sells $1bn stake in Tsogo Sun | Fin24
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SABMiller sells $1bn stake in Tsogo Sun

Jul 18 2014 17:28
Johannesburg - Global brewer SABMiller [JSE:SAB] sold its $1bn stake in gaming and hotel group Tsogo Sun [JSE:TSH] on Friday, disposing of a non-core business and giving it some cash to beef up its beer business in fast-growing Africa.

SABMiller, which is also listed in Johannesburg, said it sold 294 million Tsogo Sun shares to institutional investors at R25.75 rand each, raising R7.6bn rand.

Following the finalisation of the sale, Tsogo Sun will buy back from SABMiller an additional 133 million shares at R20.96 each, or R2.8bn.

"We will seek to reinvest the net proceeds of this disposal in our core growth beverage businesses, including our African operations," said SABMiller CEO Alan Clark in a statement.

For Tsogo Sun, which owns Johannesburg's Montecasino gaming complex and hotel brand Southern Sun among other assets, the deal would help boost earnings, improve liquidity in its shares and possibly spark a valuation re-rating.

Tsogo Sun shares should be trading at about R40 based on its most likely earnings trajectory over the next five years, according to Thomson Reuters StarMine.

StarMine's valuation model, which uses a blend of analysts' forecasts and its own tools, estimates Tsogo Sun's compound growth rate at 9% a year over the next five years - three times what the market expects.

Tsogo Sun merged with casino and theme park operator Gold Reef in 2011, a deal that saw SABMiller's stake shrink from 49%.

sabmiller  |  tsogo sun  |  gaming  |  travel and leisure


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