Sun International returns to Botswana via GICC takeover
Mbongeni Mguni | Tuesday August 6, 2024 12:03
Sun International, the South African giant which is one of Africa’s largest tourism and leisure operators, left the country in 2017 after selling its 16% stake in Gaborone Sun to Minor International, the parent group to Avani Hotels. Peermont Holdings indirectly owns 60% of Peermont Global Botswana (PGB), with the balance held by the Botswana Development Corporation (BDC). PGB owns the Grand Palm and Peermont Mondior in Gaborone as well as Peermont Metcourt Hotel & Sedibeng Casino in Francistown. The takeover is part of Sun International’s larger acquisition of Peermont Holdings in South Africa.
The larger deal is valued at ZAR7.3 billion before deductions for debt and other considerations. Under the local transaction, Sun International will also buy the BDC’s 40% stake in PGB. In a recent notice, the Competition and Consumer Authority (CCA) conditionally approved the transaction, noting that while Sun International would enjoy a dominant position in the local casino gaming market as a result of the deal, the dominance is “purely as a result of the pre-existing position of the target entity.” However, the competition watchdog noted risks around the transaction, specifically due to the buyout of the BDC, the state-owned investment agency. “The Authority is alive to the potential public interest concerns that may arise from the merger regarding the risk for merger specific retrenchments (and) the citizen shareholder exiting the shareholding structure of PGB, resulting in citizen disempowerment,” the CCA said.
Other risks include the likelihood that the merged entity might divest of some or all of its operations in Botswana and the likelihood of the merged entity sourcing goods and/or services from foreign based companies and/or individuals without giving an opportunity to Batswana and citizen-owned companies to supply those goods and services. “The Authority is actively facilitating for citizen empowerment as well as the enhancement of citizen participation in these markets,” the CCA said. The CCA’s approval of the deal comes with several conditions, including that should Sun International wish to dispose of the local business operations, it should first offer these to the BDC. “The merged enterprise shall inherit all employees of the target enterprise on the same or better terms and conditions of employment,” reads another condition of the approval.
Sun International is also barred from retrenching any employees in Botswana as a direct result of the acquisition. In addition, the South African giant is required to “give priority to local and/or citizen Batswana or citizen-owned companies in the supply of goods and/or services to the merged entity in Botswana in compliance with relevant government laws and policies.” Sun International has to provide details of all its local employees after the takeover every year for three years. The group also has to provide details of all services and goods suppliers after the takeover every year for three years.