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Chile’s Nueva Inversiones Pacifico Sur Limitada has agreed to buy a 64.94 percent stake in casino operator Sun Dreams for US$160 million (R2,76 billion) from Sun International. Chilean companies also will take full ownership of the business and settle a dispute the Sun International is involved in. Sun Dreams was locked in a R1.5 billion dispute.
The deal will see Pacifico buying the remaining 50 percent stake in the Latin American casino operator from Sun International’s subsidiary, Sun Latam. Sun International had plans to expand, but was constrained by stiff competition, fewer available casino licenses and consumers feeling the pinch in South Africa after slump in the market triggered by Covid-19. Now Dream International is looking forward to expanding abroad rather than looking inwards. .
The deal seems to be good for Sun International since it was upfront with several challenges including renewal of licenses, declining market on account of Covid-19, uncertainty over business revival etc. Sun International said the price equated to 5.5 times 2019 earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs, which could rise to 6.5 times if Sun Dreams meets certain milestones, such as license renewals. Sun Dreams would use the proceeds from the deal to settle Sun International’s offshore debt in Latin America of US$38.3 million. The balance amount will be repatriated to South Africa.
