Sun takes over Peermont

SHARE   |   Monday, 10 August 2015   |   By Kabelo Adamson
The Grand Palm Hotel The Grand Palm Hotel


It took Sun International to look across town to the west after selling its controlling stake at Gaborone Sun to launch a bid for Peermont Group. And now with the Competition Authority (CA) this week giving a green light to the P7.5 billion merger between Peermont Group and Sun International, the latter’s desire has been granted. The authority, however, prescribed conditions to the merger. The authority approved – with conditions – the acquisition of 100 percent interest in the issued share capital of Maxshell 114 Investments, otherwise known as Peermont Group by Sun International South Africa (Pty) Ltd. This follows a bid made by Sun International in March early this year to buy out casino resort group, Peermont for R9.4 billion to enhance its existing portfolio and seek new growth opportunities.


Some of Peermont Group’s properties include Grand Palm Hotel Casino Convention Resort Gaborone which also houses Peermont Walmont, Peermont Metcourt Inn and the casino in addition to The Peermont Hotel Gaborone, Peermont Inn Francistown and Sedibeng Casino Francistown. Under the proposed acquisition, all these assets will fall under the control and ownership of Sun International, the previous owners of Gaborone Sun, now known as AVANI Gaborone Hotel and Casino after international hotel investor Minor Hotel Group became a majority shareholder. Though the authority admitted concerns that will arise with respect to the 3-4 star grading short-term accommodation and hotel facilities market, it has resolved that the concerns were less likely to result in any considerable lessening of competition as the market under consideration is highly contested.

SEE ALSO:

CA has also resolved that the analysis highlights the potential competition concerns which could arise in the casino and gaming market due to the proposed transaction given that it results in a reduction in the number of players in Gaborone and Francistown and has also considered that there will be no a significant negative impact on public interest in Botswana. Using the provisions of section 55 of the Competition Act, the CA approved the merger with some few undertakings. Firstly Sun International will, with immediate effect remove its appointed director from the board of directors of Sun International Botswana (SIB) and will undertake all such steps as are necessary to remove any contractual right that it has to appoint such a director and secondly Sun International will, within six months of the date of implementation of the transaction, procure that the Operating Management Agreement in relation to SIB casinos is amended.
The amendment, according to CA, shall reflect that Minor Hotel Group or its affiliates shall be solely responsible for determining all matters of any strategic importance in relation to the function, operation and marketing of the SIB casinos including in relation to price setting, promotions, giveaways and service standards. The amendment of the Operating Management Agreement should also reflect that Sun International shall not be called upon to provide any input into any such matter and it shall at all times refrain from providing such input and lastly Sun International is expected to merely conduct the day to day operation of these casinos attending only matters of no strategic or competitive importance or relevance.


The last undertaking that the merger is subject to is that Sun International is expected to ensure that with immediate effect, none of its employees providing services within the operations of SIB casinos will in any manner of capacity concurrently be employed  within the operations of any Peermont casino within Botswana and vice versa. Additionally, all employees within the SIB casinos and Peermont casinos in Botswana are subject to appropriate non-disclosure activities. CA has also provided as per these undertakings that Sun International will provide the authority win an annual and detailed report on execution of these undertakings until such a time to be determined by CA. The report is to be compiled by an independent Consultant approved by the authority and Sun International will be tasked with bearing the costs of engaging the consultant.



Related news