South African- and London-listed breweries group SABMiller (SAB) on Thursday announced an empowerment deal with its gaming joint venture partner, Tsogo Investment Holding Company (Proprietary) Limited.
Described by the brewer as the most important empowerment deal yet in the South African hospitality sector, the agreement will result in the transfer of both companies’ interests within the hotel and gaming sectors into a new company, to be named Tsogo Sun Holdings (Proprietary) Limited (TSH), which is to be controlled by Tsogo Investments.
The announcement follows SABMiller’s review of its options for its non-core hotel and gaming interests and it believes it will be beneficial to its shareholders.
“This represents an important empowerment transaction for South Africa and a further step in our strategy of focusing SABMiller as an international beer and beverage group,” said SABMiller CE Graham Mackay.
“We are delighted with the development of our partnership with Tsogo Investments and are pleased to see it enter a new phase with this transaction. Over the medium term, SABMiller intends to continue to reduce its investment in hotels and gaming, in keeping with its strategy to divest of non-core interests.”
Ashley Mabogoane, Chairman of Tsogo Investments said, “The formation of TSH represents a major step for Black Economic Empowerment (BEE) and will substantially contribute to the transformation of the hotel and gaming industries within the context of the government’s national BEE agenda.”
Commenting on today’s announcement, Valli Moosa, the South African Minister for Environmental Affairs and Tourism, said: “This represents a landmark BEE transaction for SABMiller, Tsogo Investments and South Africa. It is also a milestone for BEE in the tourism industry, representing the largest BEE transaction to be concluded in this increasingly important sector of the South African economy.”
The transaction is subject to certain conditions, including obtaining Gaming Board and other regulatory approvals, and the finalisation of funding arrangements. It is expected to complete in the first quarter of 2003 and will be earnings neutral for SABMiller in the first full financial year following completion. – I-Net Bridge