Johannesburg – Horse racing and betting group Phumelela
Gaming and Leisure intends to raise R284 million through an offer of 16.3 million
shares at R17.39 a share to partly finance its 50 percent stake in fixed odds
sports betting operator, Supabets, the company said on Tuesday.
The R17.39 a share offer represents a 21.3 percent
discount to the closing price on Monday, Phumelela said. Phumelela announced
its intention to acquire the Supabets stake in December 2015.
Supabets offers sports betting, virtual sports betting
and limited payout machines. It has a branch network across South Africa.
Phumelela said its shareholders had already approved the
acquisition of the 50 percent stake in Supabets and the rights offer.
The deal, worth R437 million, is expected to boost
Phumelela’s earnings per share. The purchase price is based on Supabets’s
generated net profit after tax for the financial year ended February 29 last
year of R94.5 million.
Supabets’s net profit for the same period was initially
estimated at R102 million.
Phumelela, the Anastassopoulos family (Supabets’ controlling
shareholder) and KPMG had to agree on Supabets' profit.
Read also: Phumelela beats the odds
Phumelela has waxed lyrical about Supabets.
“The Anastassopoulos family has revolutionised sports
betting in South Africa. The transaction represents a unique opportunity for
Phumelela to invest in an industry-leading business with an innovative and
entrepreneurial management team that furthers various strategic objectives and
will add value to Phumelela as a whole
“Supabets is a market leader in betting on sports other
than horse racing, and Phumelela is the market leader in betting on horse
racing. The opportunity to share knowledge, technology and product and industry
best practice is attractive to both Phumelela and the Anastassopoulos
family." The company said it would leverage off Supabets’ business model
and management team to enhance and add critical scale and mass to its existing
Betting World operations.
Betting World, Phumelela’s wholly owned corporate
fixed-odds operator, has nearly 70 retail outlets and an online betting site as
well as a telephone betting centre. Phumelela said the deal positioned it for
further growth.
In details issued after the initial announcement of the
deal, Phumelela said 35 percent of the R437 million would be settled through
the issue of new Phumelela ordinary shares, while 65 percent would be in cash.
The cash portion would be financed through the issue of
new Phumelela ordinary shares by way of the rights and any remaining balance
will be settled through debt.
Phumelela’s share price on the JSE was on Tuesday was
unchanged at R22.10 a share.