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Sun International acquires Peermont in ZAR7.3bn deal

| By kylegoldsmith
South Africa's Sun International has agreed the purchase of Peermont, including its flagship Emperors Palace resort and online brand PalaceBet.
Sun International Peermont

The deal, announced on Monday, is worth ZAR7.3bn (£313m/€363.2m/$396.6m). Sun International labelled the move a “unique opportunity”, acquiring a “world-class and highly cash generative” company in Peermont.

The agreement sees Sun International obtain Peermont’s 11 properties across South Africa and Botswana. The online sports betting site PalaceBet is also included.

Emperors Palace is a leading casino resort in Gauteng, with 1,695 slot machines, 69 gaming tables and 757 rooms. In Sun International’s announcement, it pointed to the resort’s “unique proximity” to the OR Tambo International Airport as an opportunity to attract “high net-worth customers”.

The move was backed by the group’s investors, with 62.54% of shareholders providing written support for the purchase. Sun International believes the transaction will “enhance the quality of earnings and cash flow generation” of the business.

Sun International looking to maintain momentum from strong H1

The acquisition of Peermont comes after a strong H1 for Sun International, publishing its first-half results towards the end of September.

Income at Sun International rose 11.6% to ZAR5.78bn (£243.7m/€284.5m/$305.3m) for the six months to 30 June. This “exceptional growth” was in spite of a “difficult economic climate and increased competition”.

Group adjusted EBITDA for the half was ZAR1.57bn, 5.6% higher than H1 2022. In addition, overall profit for the period was ZAR485m, up by 41.0% from the previous year.

Notably, urban casinos income was also up 4.2% to ZAR3.27bn, with casino contributing 91.8% of this total. In its announcement of the Peermont purchase, Sun International stated the move would aid the company’s “strategic intent to focus its portfolio on large urban casinos”.

Sun International secures agreement after November rumours

This move was teased in late November, with Sun International revealing it had entered discussions over a potential acquisition.

The identity and nature of the party was not disclosed, while Sun International advised shareholders to exercise caution when dealing in its securities until a further announcement was made.

Sun International shares dropped and then rebounded after the acquisition talks were disclosed. After Monday’s announcement, they are currently trading at ZAR3,973 (£170/€197/$215) per share, down 2.24% on today’s (18 December) opening price.

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