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Southern Sun deal to go ahead
Southern Sun Hotels, owned by JSE-listed gaming and leisure group Tsogo Sun, has been given the green light to acquire a controlling share in Hospitality Property Fund (HPF).
Image source: www.tsogosun.com
The Competition Tribunal on Wednesday, 10 August, approved the "large merger" between Southern Sun Hotels and Hospitality, "subject to conditions related to potential information exchange".
Hospitality is a real estate investment trust which owns hotel properties and provides leasing services to third-party hotel operators. Tsogo wants to inject 10 hotels valued at about R1.8bn into Hospitality in exchange for more than 50% of Hospitality's ordinary shares.
The Competition Commission had had concerns over the sharing of information.
"While the commission found that in various geographic areas the merging parties would continue to face competition, it was concerned that since the Hospitality Property Fund leases hotel properties to Southern Sun Hotels' competitors, the merged entity had the ability to potentially exclude competitors by not renewing their lease agreements and share sensitive competitive information," the tribunal said.
"The merger was approved subject to a number of conditions including that the merging parties ensure that the HPF has its own executive management team, which will be responsible for day-to-day operations of the HPF. The team will not include anyone who is involved in management in any capacity at Southern Sun," it said.
Tsogo Sun CEO Marcel von Aulock said he was "really pleased this process is completed" and he looked forward to implementing the transaction.
Source: Business Day
Source: I-Net Bridge
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