Hospitality and gaming group Sun International has had the steam taken out of its bid to acquire Peermont Group, which owns Emperors Palace in Gauteng, saying it was informed that the Competition Commission had suggested to the Competition Tribunal that the proposed transaction be blocked.
“Shareholders are advised that the company has been notified by the Competition Commission that it has recommended to the Competition Tribunal that the Proposed Transaction be prohibited in terms of section 14A (1)(b) (iii) of the Competition Act, No 89 of 1998, as amended,” Sun International said in a statement on Friday.
In December, JSE-listed Sun International inked a R7.3bn agreement to buy all of the issued common shares and any loan account claims against Peermont Group from the shareholders of Peermont Holdings.
The purchase offered the omnichannel gaming, travel and leisure group a rare chance to operate one of the biggest, most lucrative, and best-quality casinos in a major city, as well as to purchase a collection of gaming and hospitality assets of considerable size and calibre.
Collectively, the Peermont group’s physical properties offer 3,349 slot machines, 152 gaming tables and 1,636 hotel rooms in SA and Botswana.
Emperors Palace provides a gateway to affluent clients from both outside and the rest of Africa due to its proximity to the OR Tambo International Airport, Peermont said. Additionally, by expanding the reach of Sun International's established SunBet management team throughout the Peermont Group's assets, the acquisition would improve the group's online business platform.
The commission’s decision and recommendation to the Tribunal puts that strategic intent in jeopardy; however, Sun International said it was hopeful that a different outcome would emerge from the tribunal and put it back in the running to acquire the Peermont business and assets.
“In the interim, the competition tribunal will begin its review and deliberation of the proposed transaction, which it may still approve despite the recommendation made by the Competition Commission, the company said. “Shareholders will be kept apprised of developments in this regard.”
The approval of the Tribunal is a condition precedent to the proposed transaction.
Sun International told investors it would analyse and assess the comprehensive report that includes the Competition Commission’s justifications and recommendations to the Competition Tribunal.
Sun international owns Sun City, Meropa Casino, Table Bay Hotel, the Wild Coast Sun and The Maslow Hotel.
Meanwhile, the company with an R11.4bn market cap on the JSE is gearing up to challenge the looming smoking law changes, asserting that they go “too far” and pose a risk to the profitability of its casinos.
The health department recently resurrected the Tobacco Bill by placing it before the portfolio committee on health. The bill, which aims to deter children and youth from using tobacco products, looks to encourage users to quit and protect non-smokers from tobacco smoke exposure.
The bill is set to outlaw smoking in enclosed public places or the workplace and gives the minister powers to prohibit smoking in public, commercial and private spaces while banning all domestic and cross-border advertising, promotion and sponsorship of tobacco-related products.
Sun International shares were up 1.42% to R44.92 on Friday, after rising 25% in the last six months.