Sun International's ZAR7.3bn Acquisition of Peermont Shakes Up South African Casino Scene

In a significant development in the South African casino and hospitality sector, Sun International has finalized a ZAR7.3 billion deal to acquire Peermont, marking a major shift in the industry landscape.

This acquisition includes Peermont's flagship Emperors Palace resort, which boasts 1,695 slot machines, 69 gaming tables, and 757 rooms. Emperors Palace's strategic location near the OR Tambo International Airport presents an excellent opportunity to attract high-net-worth customers. In addition to the resort, Sun International gains control of Peermont's 11 properties across South Africa and Botswana, expanding its footprint in the region.

The move received strong support from Sun International's investors, with 62.54% of shareholders endorsing the purchase. Sun International expects the acquisition to significantly boost the company's earnings and cash flow generation. This strategic move aligns with Sun International's intent to focus on large urban casinos and enhance its overall growth trajectory.

Sun International's decision to acquire Peermont comes on the heels of a robust first-half performance in 2023. Despite a challenging economic environment and increased competition, the company reported an 11.6% increase in income, reaching ZAR5.78 billion. Group adjusted EBITDA for the first half of the year was ZAR1.57 billion, a 5.6% increase from the same period in 2022. Overall, the company's profit for the period surged by 41.0% compared to the previous year.

This acquisition follows hints dropped by Sun International in late November regarding discussions related to a potential acquisition. The announcement spurred fluctuations in Sun International's share price, which is currently trading at ZAR3,973 per share, marking a 2.24% decrease from today's opening price on December 18th. However, Sun International's strategic acquisition of Peermont positions the company for continued growth and dominance in the South African casino industry.