Tsogo Sun, Gold Reef Resorts to mergeFebruary 18th, 2010 by H&R | Categories: hotels, legal, restaurants, tourism
SABMiller has agreed to merge Tsogo Sun, its South African hotels and gaming associate, with Gold Reef Resorts Limited, a Johannesburg Stock Exchange listed business with premier gaming assets in five of South Africa`s provinces, through an all-share merger.
The deal was announced today and the transaction will be effected through the acquisition by Gold Reef of the entire issued share capital of Tsogo Sun in exchange for the issue of new shares
in Gold Reef.
SABMiller will exchange its 49% interest in Tsogo Sun for a 39.7% interest in the enlarged Gold Reef/Tsogo Sun business, which will continue to be listed on the JSE with an expected market capitalisation of approximately ZAR 21 billion (USD 2.7 billion).
The merger will create not only a premier gaming and hotels company in South Africa but a business of significant scale ranking amongst the largest listed gaming groups in the EMEA area (Europe, Middle East and Africa).
The business will have an improved ability to attract new talent and resources and to capture opportunities that present themselves in the local and international gaming and hotel sectors, both in terms of organic growth and acquisition.
It is estimated that the enlarged group will be the 36th largest company on the JSE, and the largest hotel and gaming company amongst its listed EMEA peers by market capitalisation as at Friday 29 January 2010.
SABMiller will benefit from the diversification of the enlarged group`s earnings, geographies and market segments through exposure to a more diversified portfolio of assets and income streams.
The enlarged group will be well positioned to benefit from improving economic conditions and increasing consumer spending across various regions in South Africa, and from improved access to
additional sources of capital, including a greater presence and profile in the equity markets, and the South African bank loan and debt capital markets. A strengthened balance sheet with low debt levels and high cash generation, along with the benefits of diversification, will also facilitate further growth.
Commenting on the transaction, Graham Mackay, chief executive of SABMiller said: “In 2002, we facilitated a landmark Black Economic Empowerment transaction by transferring our existing gaming and hotel assets into Tsogo Sun. We have been very satisfied with the development of our partnership with Tsogo Investments since then, and we are very pleased today to see it enter a new phase with this
value accretive transaction, which has our full support.”
Completion of the merger is subject to customary conditions precedent, including the passing of all requisite resolutions to approve the merger by the shareholders of Gold Reef and by the shareholders of Hosken Consolidated Investments Limited (the indirect owner of 51% of Tsogo Sun); the South African
Securities Regulation Panel dispensing with the obligation on SABMiller and Hosken to make a mandatory offer for Gold Reef under the South African Securities Regulation Code on Takeovers and Mergers; the approval of the JSE for the listing of the new Gold Reef shares; consents from Tsogo Sun`s and Gold Reef`s lending banks; and all applicable regulatory and statutory approvals
having been obtained from, amongst others, the South African competition authorities and relevant South African gambling boards.