South African leisure group Gold Reef Resorts, which operates casinos such as Silverstar and Queens Casino, has proposed a US $2.23 billion all-share merger with casino and resort operators Tsogo Sun, a subsidiary of drinks giant SABMiller, in a bid to create one of the largest casino groups in the world. In the deal, Gold Reef will acquire Tsogo's entire issued share capital with its own new shares.

Tsogo Sun runs the Montecasino and Suncoast Casino and is 51% owned by investment group Hosken Consolidated Investments. HCI will eventually own 41.1% of the new group, SABMiller will exchange its 49% stake for a 39.7% shareholding in the new entity while, and Gold Reef will end up with 19% in the new gaming giant, which will remain listed on the Johannesburg SE.

In a statement, SABMiller said: "The merger will create not only a premier gaming and hotels company in South Africa but a business of significant scale ranking amongst the largest listed gaming groups in the EMEA area.” The statement added that SABMiller would benefit from the diversification of the enlarged company's earnings and market segments.

After the announcement, Gold Reef stock fell 4.54% to 19.76 rand, while HCI jumped 4.90% reaching 75.53 rand by midday GMT. SABMiller’s shares move up by 1.12% reaching 207.90 rand. The enlarged casino group will have a market capitalization of 21 million rand. (E-02.19.10)

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