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Johannesburg - Sun International [JSE:SUI] confirmed on Tuesday that it had entered into binding transaction agreements with Chile-based Dream S.A. (Dreams) to merge its casino and hotel assets in its Latin American portfolio.
This includes Sun International’s Monticello Grand Casino in Chile, the Ocean Club Casino in Panama and the Sun Nao Casino in Colombia. This follows the completion of a reciprocal due diligence process. Dreams is a leader in the gaming and entertainment industry with operations in Chile and Peru. The deal was announced in February this year.
The contribution of Monticello and the Ocean Sun - together valued at approximately $400m - will give Sun International a beneficial interest of 50% of the issued and outstanding shares in the combined entity. The Sun Nao Casino in Cartagena, Colombia, which has been completed at an estimated cost of $25m, will be acquired for cash by the merged entity which will effectively reimburse Sun International for its cost of development.
In order to consolidate the merged entity and entrench its position as the long term strategic shareholder, Sun International will acquire shares representing an additional 5% to increase its effective shareholding to 55%, for $50m (which includes a control premium).
Dreams has built a strong base in Chile where it now operates six casinos and it has more recently expanded into Peru, where it operates four smaller gaming establishments focused primarily on the capital, Lima, with plans to expand across the region. The Dreams’ properties typically have components that are similar to those of Sun International, including hotels, casinos, entertainment and food and beverage facilities.
The merged entity will have a sizeable portfolio of assets situated across four countries, making it the premier gaming group in Latin America, and initially consisting of 13 properties, that between them have 6 500 slot machines, 300 table games, six hotels and 25 restaurants.
