Sun sets on Peermont bid

Sun International and Peermont Holdings have abandoned the proposed R7.3bn transaction that would have seen Sun International acquire control of its smaller competitor. The parties have cited an inability to complete the transaction within the self-imposed longstop date of September 15 as the reason for their decision.

The transaction was lodged with the Competition Commission in 2023, and in October 2024 the commission recommended that it be prohibited as it would have resulted in a reduction in competition in the casino market. If the deal had gone ahead, the enlarged Sun International and Tsogo Sun would have controlled more than 90% of the market.

The transaction had been on track to be heard by the Competition Tribunal this August, which would have ensured a ruling would be made before the longstop date. However, this schedule was upended when the Constitutional Court set down overlapping weeks in August to hear the foreign exchange case being fought between the competition authorities and the banks.

Legal teams involved in the Sun International transaction are also involved in the forex case, and had to ask the tribunal to postpone its hearing so they could attend to the Constitutional Court matter.

The tribunal was only able to accommodate them for closing arguments on October 2, which falls outside the longstop date.

In a Sens announcement released on Wednesday, Sun International said the parties then decided to terminate the deal.

The approval of the Competition Tribunal is a condition precedent to the proposed transaction. “Accordingly, as the hearing date is after the regulatory longstop date, the parties have mutually agreed to the immediate termination of the proposed transaction,” said Sun International.

This is the second time a takeover of Peermont by Sun International has been abandoned. In April 2016 the casino group informed the competition authorities that it would not proceed with its bid to acquire Peermont in a deal valued at R4bn at the time.

The Competition Commission had also recommended prohibition of that deal on the grounds it would negatively affect consumers. The competition authorities indicated the deal could go ahead if Sun International sold off its Time Square Casino in Pretoria or Peermont sold Emperors Palace in Gauteng.

In an unprecedented move the parties opted to abandon that earlier proposed transaction.

Insufficient capacity

The inability to accommodate the merging parties’ deadline is seen by some competition lawyers as more evidence the tribunal doesn’t have sufficient capacity to process the volumes of transactions it is required to deal with. Though some would say it’s the legal teams that have insufficient capacity. 

This latest development follows a recent public outcry about the long delays faced by Vodacom and Remgro with the proposed merger of their fibre businesses.

The tribunal is currently short of full-time panel members as well as key staff.

In contrast to Sun International’s inflexible approach to its longstop date, Vodacom and Remgro have extended theirs scores of times to accommodate the slow and complex process of investigating the competition issues. That process involves accommodating interventions by third parties not involved in the deal.

In the Sun International and Peermont case, Tsogo Sun made persistent interventions as well as potentially intrusive discovery requests.

In addition to boosting the capacity of the competition authorities, minister of trade, industry and competition Parks Tau might have to give some consideration to restraining the rights of intervenors. As well as limiting the scope for public interest issues to become long-drawn-out negotiating tools.

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