Don Gains Most in 11 Years on Hotel Sales: Johannesburg Mover

The Don Group Ltd. (DON) catapulted the most in almost 11 years after saying it sold three of its nine hotels for 77.5 million rand ($9.3 million) as it exits the travel and leisure industry.

The stock surged as much as 70 percent, the biggest leap since August 2001, to 17 cents and traded at 15 cents by 12:25 p.m. Johannesburg, increasing the company’s market value to 44.2 million rand. More than 1.4 million shares changed hands, almost 35 times the three-month daily average.

Overcapacity in the market after more hotels were built ahead of the 2010 Soccer World Cup in South Africa made it difficult for smaller groups to make a profit, Anthony Clark, an analyst at Vunani Securities, said by phone from Cape Town.

“The hotel market has changed,” Clark said. “The only way to make money as a shareholder is to force Don to break up, which is exactly what it is doing.”

Proceeds from the sales will be used to reduce interest- bearing long-term debt, the group said in a statement late yesterday. Its remaining six hotels will also be sold as it moves away from owning and operating hotels.

“The company is a liquidation plan on the asset value,” Clark said.

To contact the reporter on this story: Stephen Gunnion in Johannesburg at

To contact the editor responsible for this story: Gavin Serkin at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.