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South Africa – SABMiller to offload 40 per cent share in Tsogo Sun

By - 7 July 2014

Brewing giant SABMiller is to dispose of its shareholding in Tsogo Sun through a combination of an institutional placing and a buy back by Tsogo Sun.

The Tsogo Sun Hotel portfolio comprises 90 hotels, with 14,316 rooms, and 14 casinos. On April 15 2014, SABMiller announced that it was conducting a strategic review of its investment in JSE-listed gaming, hotel and entertainment group Tsogo Sun Holdings Limited SABMiller currently has an effective 39.6 per cent shareholding in Tsogo Sun valued at approximately ZAR11.7bn (approximately US$1,089m) based on the closing share price of ZAR26.90 on 4 July 2014.

SABMiller, in co-operation with Tsogo Sun, has now completed its strategic review and has decided to dispose of up to all of its ordinary shares in Tsogo Sun through two conditional transactions: firstly a fully marketed secondary placing of up to approximately 305 million Ordinary Shares to selected South African and international institutional investors and secondly a buy back by Tsogo Sun of at least approximately 130m Ordinary Shares for an aggregate consideration of ZAR2.8bn (approximately US$260m).
Alan Clark, Chief Executive of SABMiller said: “SABMiller has been a supportive shareholder of Tsogo Sun since 2002, when we transferred our existing gaming and hotel assets into Tsogo Sun as part of a landmark Black Economic Empowerment transaction. The business has performed well over the years. The merger with Gold Reef Resorts in 2011, and the resultant listing on the JSE, has transformed Tsogo Sun. However, gaming and hotels are not core to our operations and we have concluded that the time is right for us to exit our investment through a transaction which is beneficial to shareholders of both SABMiller and Tsogo Sun and to reinvest the proceeds in our core growth businesses, including our African operations.”

Tsogo Sun’s management will commence a roadshow to meet selected institutional investors in South Africa and internationally.

The board of directors of Tsogo Sun believes that the Repurchase represents a unique and attractive opportunity for Tsogo Sun to repurchase and cancel a significant number of Ordinary Shares on terms that are expected to have a positive impact on the company’s earnings per Ordinary Share and its black economic empowerment shareholding. The board of directors of SABMiller believes that the Repurchase will provide SABMiller with certainty over the disposal of approximately 30 per cent of its shareholding and will enhance the prospects of the Placing.

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