Sun International and Peermont decide to abandon proposed merger agreement
In a surprising turn of events, Sun International has called off its proposed acquisition of Peermont Holdings, a move that is expected to maintain a competitive landscape in the South African gambling industry.
The acquisition, worth approximately €359.6 million (R7.3 billion), included Peermont's Emperor's Palace resort and its online sports betting brand, PalaceBet. The deal, however, faced several regulatory challenges that ultimately led to its termination.
One of the main concerns was the potential decrease in competition in the gambling industry. The South African Competition Commission recommended that the deal be prohibited due to the severe concentration of casinos that would result from the merger. With 92% of casinos operated by two companies, the Commission feared this could promote cooperation over competition.
Another challenge was the scheduling of a hearing by the Competition Tribunal. The hearing, initially set for October 2, 2025, was after the longstop date of September 15, 2025, making it impractical for the deal to proceed.
Despite Sun International shareholders approving the deal in March 2024, the regulatory hurdles ultimately led to its cancellation. The Competition Tribunal still had the power to approve the transaction, but the hearing date was scheduled too late to meet the deal's deadline.
The termination of the deal preserves the current competitive structure in the market. The presence of multiple operators like Peermont (with its Emperor's Palace) and Sun International (with Time Square and Carnival City) ensures continued competition in the Gauteng region.
The non-concentration of ownership in the casino industry should also support healthier competition, potentially benefiting consumers through better services and offers. The cancellation might open opportunities for other players to enter the market or for existing players to expand, leading to further diversification and competition.
Ulrik Bengtsson, who recently secured his South African work permit, has begun his tenure as CEO of Sun International. The company's shares were trading 0.13% higher at ZAC4,730.00 per share in Johannesburg on Friday.
In conclusion, the cancellation of the acquisition maintains the competitive landscape in the South African gambling industry, which is crucial for consumer choice and innovation. The market will continue to be a vibrant and dynamic space, offering a wide range of options for consumers seeking entertainment and gaming experiences.
The cancellation of Sun International's €359.6 million acquisition of Peermont Holdings, including sports betting brand PalaceBet, preserves the competitive structure in the South African gambling industry, benefiting consumers through continued competition among operators like Peermont and Sun International. With the non-concentration of ownership, opportunities might arise for new players to enter or existing ones to expand, leading to increased diversification and competition in the finance sector of the business industry.
