Sun International’s takeover of Peermont blocked
The proposed R9.43-billion takeover of gaming and hotel company Peermont Group by JSE-listed resort hotel group Sun International has been denied in a move the Competition Commission says will prevent decreasing competition in an already concentrated market.
Sun International had planned to acquire 100% of Peermont’s controlling shareholder, investment company Maxshell Group, which owns Emperors Palace, in Gauteng, and Graceland, in Mpumalanga, to unlock new growth opportunities.
However, the commission recommended to the Competition Tribunal that the proposed deal be prohibited on concerns that, if allowed, the merger could give rise to significant competition concerns in the central Gauteng gambling market.
“The gambling industry is significant in the South African economy, with high barriers to entry as it is regulated by the various gambling boards. This merger would have created a highly concentrated market structure in Gauteng, thereby, substantially lessening competition,” acting Deputy Commissioner Hardin Ratshisusu said in a statement on Thursday.
In an update to the market, Sun International said it would assess its options upon receipt of the detailed report on the recommendation made by the commission to the tribunal.
“The acquisition of Emperors Palace, near the OR Tambo International Airport, provides us with an opportunity to increase gaming revenue from Gauteng, as it is the provincial jurisdiction with the highest gambling spend in South Africa,” Sun International said in March, when it first announced the proposed acquisition.
The approval by the tribunal was a condition precedent to the deal that required fulfillment by March 31.
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