South Africa's Gold Reef Resorts and rival Tsogo Sun agree for $2.7 billion merger

Gold Reef Resorts Ltd (Gold Reef), a leading South African gaming and entertainment company and rival Tsogo Sun Holdings Pty Ltd (Tsogo) have agreed to merge their gaming and hotel businesses, bringing an end to three-year old disputes and negotiations to create a pre-eminent hotel and entertainment giant in the country.

The proposed merger will be effected through an acquisition by Gold Reef of the 100 per cent of Tsogo shares held by Tsogo Investment Holding Company Pty Ltd (TIH) and SABSA Holdings Pty Ltd in exchange for the issue of new Gold Reef shares, the company said in a statement.

Under the terms, Gold Reef will issue approximately 889 million new shares for the acquisition of Tsogo. Based on the closing price of R19.25 ($2.51) per Gold Reef share on 29 January 2010, Tsogo is valued at around $2.2 billion.

The merged entity is expected to have a market capitalisation of over $2.7 billion, with a debt of around $718 million and annual revenue of approximately $1 billion.

Gold Reef CEO Steven Joffe said, ''This merger gives Gold Reef shareholders direct access to Tsogo's attractive 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 Resorts Limited is a gaming and entertainment company that operates resorts and entertainment complexes throughout South Africa. It owns Gold Reef City Casino and Theme Park and Silverstar Casino in Gauteng, Golden Horse Casino in KwaZulu-Natal and Goldfields Casino in Free State, and has interests in three others.