Life in the Reef
Gold Reef Casino Resorts Ltd., the South African operator whose acquisition by Ethos Private Equity Ltd. was blocked by the government recently, has issued a cautionary statement to shareholders announcing that a preliminary meeting with Tsogo Sun Holdings (Proprietary) Ltd. had been held to discuss a potential offer for the company.
The 9.83 billion rand-$1.3 billion-bid by Ethos was held up by authorities following protests by Tsogo that it had made a higher offer for Gold Reef that was not properly considered by the company’s management. Had the takeover gone through, it would have been the second largest private-equity takeover of a publicly traded South African company.
In November, shareholders voted almost unanimously for the Ethos offer, according to Business Report. That offer was initially approved by the competition authorities and the Securities Regulation Panel. After Tsogo Sun objected, pointing to a R12 million payment made by Ethos to Maxim Krok, Gold Reef’s non-executive chairman and major shareholder, the SRP took a second look and squelched the deal.
Gold Reef shares fell to below R22 when the original Ethos deal was stopped. By the end of February the share price of Gold Reef had climbed back to R27.
“It’s obvious Gold Reef shareholders want to sell,” Wayne McCurrie of Momentum Group Ltd. in Johannesburg said in a Bloomberg article. “South Africa’s gaming industry is already fairly well consolidated, so it may be worth taking a wait-and-see stance on this new potential deal.”
