Sun International set to buy Emperors Palace Resort

Sun International has unveiled plans to acquire all the issued ordinary shares and any claims on loan accounts against Peermont Holdings Proprietary Limited. The agreement, yet to determine the exact cash consideration payable, is valued at an enterprise value of R7.3 billion for Peermont.

Peermont, renowned for its flagship Emperors Palace Resort in Johannesburg, operates in the hospitality and entertainment sector. Sun International, the force behind the iconic Sun City resort, sees this acquisition as a strategic move, providing a chance to obtain significant gaming and hospitality assets.

While the final cash consideration remains pending, it is anticipated to be less net debt and specific sellers’ transaction costs, subject to capital expenditure and working capital adjustments. These adjustments, estimated at approximately R3.236 billion as of September 30, 2023, will be calculated at the closing date of the proposed transaction.

The implementation of the agreement is contingent on fulfilling standard conditions precedent for transactions of this nature. This includes approval from relevant Competition Authorities, the Gauteng Gambling Board, and Sun International shareholders.

The acquisition of Peermont is expected to bring one of the largest, most cash-generative, high-quality casinos in a major metropolitan area into Sun International’s portfolio. Emperors Palace, situated in proximity to OR Tambo International Airport, is deemed a gateway to high-net-worth customers from Africa and beyond, creating opportunities for synergies with the group’s operations.

Sun International envisions large-scale benefits, citing potential growth in the online sports and gaming business with the integration of Peermont’s assets. Chairman Sam Sithole expressed confidence in the proposed acquisition, noting support from shareholders and emphasizing the compelling equity story arising from increased scale, larger enterprise value, and enhanced capital markets visibility. The Board is optimistic about the management team’s ability to execute the strategy effectively.