Johannesburg - Sun International will pay R675 million ($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 north-west of Johannesburg had agreed to pay as much as R900 million 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 R9.4 billion 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. 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 after the regulator missed at least four deadlines. SABMiller and Coca-Cola 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 to get the go-ahead to buy a majority stake in South African retailer Massmart Holdings.
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 R74.58, valuing the company at R8.1 billion. Tsogo Sun Holdings is South Africa’s biggest casino operator, valued at R27 billion.
* With assistance from Loni Prinsloo
BLOOMBERG