SABMiller (LSE: SAB) — the company behind global brands Pilsner Urquell, Peroni and Nastro Azzurro — has announced that it intends to dispose of the entirety of its 39.6% shareholding in the Johannesburg Stock Exchange-listed gaming, hotel and entertainment group, Tsogo Sun Holdings Limited.
It was back in April that SABMiller revealed that it was conducting the strategic review of its investment in Tsogo Sun that has now led to today’s announcement. SABMiller’s shareholding in Tsogo Sun is valued at around 11.7bn Rand (£633m).
The disposal will take the form of a secondary placing of up to about 305m ordinary shares, which will be marketed to selected South African and international institutional investors, combined with a buy-back by Tsogo Sun of at least a further 130m ordinary shares.
SABMiller says that the repurchase of shares by Tsogo Sun will provide certainty regarding the disposal of approximately 30% of its shareholding and will enhance the placing’s prospects.
Commenting on the announcement, SABMiller Chief Executive Alan Clark 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. 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.“
The share price of SABMiller is up 8.5% so far in 2014, compared to a mere 1.2% rise in the FTSE 100. And the brewing giant has out-performed the index over the past five years, too, with SABMiller’s share price having increased 165%, versus the FTSE 100’s gain of 61%.
