A new operator with international potential is taking shape in South Africa.

The new Gold Reef/Tsogo Sun entity will become the 36th largest listed company on the Johannesburg Stock Exchange. The company will have a market capitalization equal to about $2.7 billion. Its 14 casino resorts in South Africa and 90 hotels in Africa and the Middle East will make it a formidable player in the international gaming and leisure market.

An all-stock deal will see Gold Reef acquire Tsogo Sun Group from Tsogo Sun Investment Holdings (TIH) and SABMiller (SABSA), which currently hold 51 percent and 49 percent of Tsogo Sun Group, respectively. Gold Reef will issue 888.26 million new shares, of which 41.3 percent will go to TIH, 39.7 percent to SABSA and 19 percent to existing Gold Reef shareholders.

Steven Joffe, CEO of Gold Reef, said, "We believe this transaction is a great outcome for our shareholders to participate in a larger and more diversified group. It opens up a number of growth opportunities as well as improves access to capital and new talent. It is a win-win outcome for all concerned."

The Financial Times speculates that SABMiller will ultimately sell its position in the new company to devote itself to its core business, which is the beverage industry.

"This transaction heralds the creation of a significant entity in the gaming and hospitality industry and in corporate South Africa," said Jabu Mabuza, CEO of Tsogo Sun. "The merger of two quality portfolios and listing on the JSE provides investors with exposure to diversified markets and geographies. We will look to capitalize on the new growth opportunities that this merger brings."

By GGB Staff

Staff writers for Global Gaming Business magazine. Las Vegas, Nevada.