Sun International, under the leadership of South African business executive Anthony Leeming, is actively considering the establishment of a separate business unit to house its smaller hotel and casino assets in a strategic move to optimize its operations and create value for investors.
The objective of the planned move by the Leeming-led group is to intensify the focus on cash-generating operations, streamline overall functioning, and fortify the company’s standing in the gaming and hospitality sector.
This decision follows Sun International’s recent announcement of plans to acquire Emperors Palace owner, Peermont Group, in a R7.3-billion ($400 million) deal. The acquisition, expected to conclude by the end of March 2024 pending regulatory approvals and shareholder consent, includes 11 additional casinos and resorts in South Africa and Botswana, reinforcing Sun International’s dominance in the regional gaming and hospitality landscape.
Sun International’s strategic acquisition: A financial win with earnings accretion and cash flow amplification
The financial strength of Peermont Group, with an anticipated EBITDA of R1.2 billion ($65.5 million) for the fiscal year ending Dec. 31, 2023, adds credibility to the deal. The combined entity is poised 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.
Furthermore, the deal is expected to strengthen 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, founded by Sol Kezner 56 years ago, thrives under Leeming’s leadership
Founded 56 years ago by the late South African accountant and business magnate Sol Kezner, Sun International, under Leeming’s leadership, has solidified its position as one of the leading gaming and hospitality businesses on the African continent.
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 in navigating the dynamic landscape of the gaming and hospitality industries. Under Leeming, Sun International has seen a remarkable increase in its share price, with its market capitalization exceeding $570 million.
