Gold Reef to merge with Tsogo

The companies said yesterday that the transaction will involve Gold Reef acquiring Tsogo's entire issued share capital to be funded by the issue of new Gold Reef shares. Brewing giant SABMiller said it will exchange its 49 %  stake in Tsogo Sun for a 39.7 % holding in the new group, which will remain listed on the Johannesburg bourse.

"The merger will create not only a premier gaming and hotels company in South Africa but a business of significant scale ranking amongst the largest listed gaming groups in the EMEA area," SABMiller said in a statement. Shares in Gold Reef, which operates casinos such as Silverstar and Queens Casino, fell 4.54 %.

SABMiller said it will benefit from the diversification of the enlarged company's earnings and market segments. Gold Reef said its shareholders will now have access to Tsogo Sun's portfolio of assets.

"It creates a company of significant scale and diversification across geographies and markets. As a larger and stronger company, we will be well positioned to pursue attractive growth opportunities in new markets," Gold Reef CEO Steven Joffe said in a statement.

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

"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," Joffe concluded.