Sun International bets big on casinos as it scoops up Emperor’s Palace owner Peermont

18 Dec 2023

The hospitality and gaming group’s focus on South Africa will now expand to Botswana too, as the Peermont group owns properties in the neighbouring country.

Gaming and hospitality group, Sun International reached an agreement on 14 December to acquire the “world class and highly cash-generative Peermont Group, including its flagship Emperor’s Palace Hotel Casino Convention and Entertainment Resort, for R7.3-billion.

The announcement brings to an end speculation about the cautionary announcement it issued on 27 November, in which it informed shareholders about a possible acquisition, saying negotiations with the unnamed entity were ongoing.

Market watchers assumed that it had planned to expand its sports or online betting interests.

The deal is subject to the fulfilment of conditions precedent, which are standard for such transactions, including approval by the competition authorities, the Gauteng Gambling Board and Sun International shareholders.

Peermont owns various casino resorts in South Africa and Botswana.

In a statement, Sun International, which owns Sun City, Grand West and the Table Bay Hotel, among other properties, said the acquisition represents a unique opportunity for it to acquire a group of gaming and hospitality assets of significant scale and quality, as well as one of the largest, most profitable, high-quality casinos in a major metropolitan area.

Read more in Daily Maverick: Fun and games as Sun International celebrates tenfold bounce in earnings

Emperor’s Palace, situated near OR Tambo International Airport, attracts big spenders from beyond South Africa’s borders, which the group said will help “drive opportunities for synergies with the rest of the group’s operations, including hotels and resorts, as well as the online sports and gaming business, creating large-scale benefits for Sun International”.

The purchase will also boost Sun International’s SunBet online betting platform, by expanding its reach across Peermont, which also owns an online betting brand, PalaceBet.

South Africa focus

Over the past six years, Sun International shed its interests in Africa and Latin America as it redirected attention closer to home.

Its current focus on South Africa is paying off, helping drive a return to profitability as leisure, bleisure and business guests return. It has seen a sharp jump in occupancy and last month, Sun International not only launched its luxury Lefika timeshare units at Sun City in the North West but it also reopened the revamped Grand West Hotel after a R133-million investment.

Sun International’s CEO, Anthony Leeming said the addition of Peermont’s land-based casinos to their portfolio, underpinned by the flagship Emperors Palace Resort, will enhance the quality of earnings and cash flow generation of the group. “This is consistent with the group’s strategic intent to focus its portfolio on large urban casinos with the ability to drive value-enhancing strategies across smaller regional assets and online growth.”

Leeming said the Peermont Group’s entrepreneurial management team has been a significant factor in its success and the shared expertise of the staff and management of the combined group will result in mutual benefits and efficiencies. “Further, we are encouraged that the proposed transaction creates more opportunities for our staff to develop and grow within the combined group.

“We will leverage off combined synergies to drive margin enhancement and capital efficiency. Importantly, we are in a position to conclude a transaction of scale, rapidly de-gear and maintain a dividend pay-out as a result of the group’s excellent recent performance and strong financial position thereby benefiting our locally empowered South African shareholder base.”

The Peermont Group, which was founded in 1995, owns and operates resorts, including hotels, casinos, convention centres, health spas, restaurants, bars and other facilities.

Its physical properties have 3,349 slot machines, 152 gaming tables and 1,636 hotel rooms in South Africa and Botswana.

Emperors Palace, its flagship property, includes four unique hotels, a health and beauty spa, restaurants, entertainment venues, a cinema and conferencing. DM

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South Africa focus