South African casino operator Tsogo Sun’s plan to purchase significant stakes in two Western Cape properties from rival Sun International has cleared an important hurdle after being approved by shareholders of an employee trust scheme.
In partnership with its Grand Parade Investments black empowerment partner, Sun International controls SunWest International and Worcester Casino, which operate the popular GrandWest Casino and Golden Valley Casino properties near Cape Town. Johannesburg-based Tsogo Sun wants to buy 10% of these interests for approximately $93.2 million and its plan has now inched closer to reality after the Sun International Employee Share Trust approved the transactions ahead of a Saturday deadline.
The proposal, which has now become unconditional following the approval, would see Tsogo Sun pay $46.6 million for a 10% stake in SunWest International along with an identical amount for the same share in Worcester Casino. The operator has already laid out an initial payment of $2.4 million and now intends to bring its plan before shareholders of Grand Parade Investments ahead of a June 30 deadline, although this limit could be extended by a further month.
The proposition would see Tsogo Sun serve as a passive investor with no representation on the boards of SunWest International or Worcester Casino while additionally having no operational involvement.
For its part, Sun International declared that it would increase the stake it sells to Tsogo Sun to 20% should Grand Parade Investments decline the offer.
Tsogo Sun, which is the largest listed hotel and tourism company in South Africa, is eager to enhance its presence in the Western Cape and initially attempted to buy 40% stakes in the operators two years ago. This original plan was terminated last year following advice from the nation’s competition authority before being restructured soon after.