Sun International shares rose as much as 8% in intraday trade after news that the company will no longer pursue its R7.3bn acquisition of rival casino group Peermont Holdings.
The unsuccessful transaction, which would have seen Sun International acquire Peermont and its flagship Emperors Palace casino in Kempton Park, was terminated after the Competition Commission recommended the deal be prohibited in October 2024. The regulator cited concerns about anticompetitive effects in the national and Gauteng casino gambling markets.
Despite shareholder approval and credit-backed funding from lenders in 2024, the Competition Commission ruled that the merger would reduce the number of national casino operators from three to two, resulting in 92% of all casinos in SA being controlled by just two firms. It said this level of concentration would limit competition and restrict customer choice.
In central Gauteng the merger would have left only two major operators, Sun International and Tsogo Sun, by removing Peermont’s Emperors Palace as a competitor to Sun International’s Time Square and Carnival City casinos, as well as Tsogo Sun’s Montecasino.
The commission raised concern that the merger would dampen competitive rivalry, potentially leading to co-ordinated behaviour, reduced promotions and fewer incentives for customers.
“New entry into this market is unlikely due to the limited availability of casino licences. In central Gauteng, in particular, there are no unallocated casino licences. ,” it said.
Tsogo Sun’s experience in the Western Cape further underscores the Competition Commission’s concern about market concentration and limited competition. The group has previously expressed frustration over prolonged regulatory delays and monopolistic conditions that have stalled its plans to develop casino and hotel facilities in Somerset West and the Strand.
Tsogo Sun argues that the lack of progress is hindering job creation, tourism growth and fair competition — issues that mirror the commission’s warning that the Sun International-Peermont merger would worsen an already concentrated market, restrict customer choice and reduce competitive pressure in regions such as Gauteng.
The collapse of the deal comes while the hotel and gambling industries are showing strong growth potential. The hotel market is projected to generate $1.21bn (R21.3bn) in revenue this year, growing at 5.13% annually to reach $1.48bn by 2029, with user numbers expected to rise to 8.43-million, according to Statista.
In its latest annual report Sun International had expressed hope that the Competition Tribunal would still approve the deal despite the commission’s recommendation.
The company had positioned the deal as a part of its strategy to expand its gaming assets and increase scale. The acquisition had already been integrated into the group’s broader capital allocation strategy, which also included investments in online betting platform Sunbet, the Sun Slots limited payout machine business and property upgrades.
The company said it had undertaken preparatory work ahead of the transaction, including securing board oversight and legal counsel, and expressed hope that the Competition Tribunal might still approve the deal despite the commission’s recommendation.
Sun International said in a statement on Wednesday that the tribunal had the power to approve the deal despite the recommendation made by the commission.
The Competition Tribunal has set October 2 for a hearing and closing arguments.
The tribunal’s approval is a condition precedent to the proposed transaction, which has a long-stop date of September 15. As the hearing date is after the regulatory long-stop date, the parties have mutually agreed to the immediate termination of the proposed transaction, Sun International said.
With Kabelo Khumalo
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