M & A Africa: Sun International Buying Peermont Group, Wants ‘Fewer, Larger, Quality’ Properties

M & A Africa: Sun International Buying Peermont Group, Wants ‘Fewer, Larger, Quality’ Properties

Sun International, the resort and casino chain created by South African Sol Kerzner, said it will buy the Peermont Group, which has 14 hotels, casinos and resorts in South Africa and Botswana, TourismUpdate reports.

The two groups have reached an agreement over Peermont’s objection to Sun International’s Menlyn Maine project in Tshwane.

Sun International, which is traded on the Johannesburg Stock Exchange, hoped to establish a $300-million “urban entertainment destination” in the city of Tshwane and relocate its ailing Morula Casino there, according to a MoneyWeb report.

The Peermont acquisition gives Sun International a way to increase gaming revenue from Gauteng, which has the highest gambling spending in South Africa, according to a report in HotelandRestaurant. Emperors Palace is one of the largest casinos in South Africa with an attractive financial and operating profile, according to the report.

Best known for its Sun City Resort near Rustenburg in the North West Province, Sun International has resorts, luxury hotels and casinos in eight countries and 27 destinations.

“Peermont has a number of complementary attributes that will enhance our group,” said Sun International CEO Graeme Stephens, according to TourismUpdate. “These include the fact that Peermont has established and well-maintained assets and infrastructure, particularly Emperors Palace, which also has extensive hotel and conference facilities.” Peermont’s portfolio also has high margins and an experienced management team, he added.

Sun International wants to diversify its portfolio to increase exposure to offshore opportunities, particularly Latin America, Stephens said. “While the Peermont portfolio of assets will initially increase the proportion of the combined business that arises in Southern Africa, it also opens the possibility of further restructuring of local assets, with a medium-term objective of creating a portfolio of fewer, larger, quality assets.”

Peermont Group CEO Anthony Puttergill said: “The proposed transaction is a positive development for Peermont and supports the momentum that we have built during the past few years. We believe that a number of strong growth opportunities can be unlocked by being part of a larger and well-resourced group.”