Sun to Pay $43 Million to Peermont as Casino Deal Collapsesby
Sun International agreed payout related to new Pretoria resort
Antitrust regulator said $600 million deal to hurt competition
Sun International Ltd. will pay 675 million rand ($42.8 million) to fellow South African hotel and casino operator Peermont Global after an attempt to buy the closely held company collapsed amid a failure to win antitrust approval.
The owner of the Sun City resort northwest of Johannesburg had agreed to pay as much as 900 million rand to Peermont if the deal failed and a new complex at Menlyn Maine, in the South African capital of Pretoria, started operations. A settlement was reached as the resort is at an advanced stage of construction and will open in April, Sun International said in a statement on Wednesday. Peermont had objected to the project in the High Court before a deal was struck to combine the companies.
Sun International agreed to buy Peermont for 9.4 billion rand in March 2015 to add resorts such as Johannesburg’s Emperor’s Place and resolve the dispute over the Menlyn Maine complex. The Competition Commission recommended in December that the deal be blocked due to the affect on the gambling market in Gauteng, South Africa’s richest province. The Competition Tribunal was due to conduct a hearing into the takeover in June, three months after a March 31 approval deadline set by the companies, Sun International said.
South Africa’s competition authorities have a history of taking their time to investigate acquisitions. Anheuser-Busch InBev, the Belgian maker of beers including Budweiser and Stella Artois, is still waiting for the Competition Commission to finish a probe into its $106 billion takeover of SABMiller Plc after the regulator missed at least four deadlines. SABMiller Plc and Coca-Cola Co. received final approval to combine African bottling operations earlier this month after an 18-month process, about the same time it took Wal-Mart Stores Inc. to get the go-ahead to buy a majority stake in South African retailer Massmart Holdings Ltd.
Sun International, founded by South African hotel magnate Sol Kerzner, has 26 resorts across Africa and the Americas, where it has a complex near Santiago and a casino in Panama. Peermont is owned by a private equity group led by the Mineworkers Investment Company and has 16 hotels across South Africa, Botswana and Malawi.
Sun International shares have declined about 40 percent since the Peermont deal was announced, and fell 1.8 percent on Wednesday to 74.58 rand, valuing the company at 8.1 billion rand. Tsogo Sun Holdings Ltd. is South Africa’s biggest casino operator, valued at 27 billion rand.