In a bold move to fortify its standing in the gaming and hospitality sector, Sun International, led by South African business executive Anthony Leeming, has announced its plans to acquire the Peermont Group for an astounding R7.3 billion ($400 million) — the deal, expected to conclude by the end of March 2024, is contingent upon regulatory approvals and shareholder consent.
This acquisition marks a significant stride for Sun International, cementing its dominance in the regional hospitality and gaming landscape — the deal encompasses 11 additional casinos and resorts in South Africa and Botswana, including the esteemed Emperors Palace.
To fund this strategic acquisition, Sun International is opting for a strategic infusion of new debt — elevating its gearing ratio to approximately 2.6x. However, the company projects a swift reduction to below 2.0x within the next 24-36 months.
Sun International’s enlarged customer base and asset portfolio poised for success in emerging sectors post-acquisition
The financial prowess of Peermont Group adds credibility to the deal, with an anticipated EBITDA of R1.2 billion ($65.5 million) for the fiscal year ending Dec. 31, 2023 — the combined entity is set to wield substantial gaming firepower, boasting more than 3,300 slot machines, 152 gaming tables, and 1,600 hotel rooms.
From a financial perspective, the acquisition aligns with Sun International’s objectives, projected to be accretive to earnings and amplify cash flows. Despite concerns about debt levels, the company expresses confidence in its ability to navigate and swiftly restore financial equilibrium.
The strategic fit of Peermont’s assets, especially Emperors Palace, positioned in a major metropolitan area, enhances Sun International’s urban footprint, providing a lucrative gateway for the combined entity.
Additionally, the deal is expected to fortify Sun International’s market position, creating synergies that extend into online gaming. The expanded customer base and diversified assets are anticipated to be instrumental in capitalizing on growth opportunities in emerging sectors.
Sun International shines: H1 2023 witnesses a 12-percent revenue surge and 83-percent headline earnings spike
Sun International, founded 56 years ago by the late South African accountant and business magnate Sol Kezner, has solidified its position under Leeming’s leadership as one of the leading gaming and hospitality businesses on the African continent.Â
In the first half of its 2023 fiscal year, Sun International experienced a surge in revenue by 12 percent, reaching R5.79 billion ($315.9 million), accompanied by an 83 percent increase in headline earnings, reaching R422 million ($23.03 million).
These financial indicators underscore the group’s resilience and strategic acumen in navigating the dynamic landscape of the gaming and hospitality industries. Under Leeming, the company has seen a remarkable increase in the group’s share price, market capitalization exceeding $570 million, and substantial returns to shareholders.
