Phumelela in R284m rights offer to fund Supabets stake
HORSE racing and betting group Phumelela Gaming and Leisure intends to raise R284 million through an offer of 16.3million shares at R17.39 a share in order to partly finance its 50 percent stake in fixed odds sports betting operator, Supabets, the company said yesterday.
The R17.39 a share represented a 21.3percent discount to the closing price on Monday, Phumelela said.
Phumelela announced its intention to acquire the Supabets stake in December 2015. Supabets offers sports betting, virtual sports betting and limited payout machines. It has a branch network across South Africa.
Phumelela said its shareholders had already approved the acquisition of the 50 percent stake in Supabets and the rights offer.
The deal, worth R437m, was expected to boost Phumelela’s earnings per share.
The purchase price was based on Supabets’ generated net profit after tax for the financial year ended February 29 last year of R94.5m.
Supabets’ net profit for the same period was initially estimated at R102m. Phumelela, the Anastassopoulos family (Supabets’ controlling shareholder) and KPMG had to agree on Supabets’s profit.
Phumelela has waxed lyrical about Supabets. “The Anastassopoulos family has revolutionised sports betting in South Africa. The transaction represents a unique opportunity for Phumelela to invest in an industry-leading business with an innovative and entrepreneurial management team that furthers various strategic objectives and will add value to Phumelela as a whole.
“Supabets is a market leader in betting on sports other than horse racing, and Phumelela is the market leader in betting on horse racing. The opportunity to share knowledge, technology and product and industry best practice is attractive to both Phumelela and the Anastassopoulos family.”
The company said it would leverage off Supabets’s business model and management team to enhance and add critical scale and mass to its existing Betting World operations. Betting World, Phumelela’s wholly owned corporate fixed-odds operator, has nearly 70 retail outlets and an online betting site as well as a telephone betting centre. Phumelela said the deal positioned it for further growth.
In details issued after the initial announcement of the deal, Phumelela said 35 percent of the R437m would be settled through the issue of new Phumelela ordinary shares, while 65 percent would be in cash.
The cash portion would be financed through the issue of new Phumelela ordinary shares by way of the rights “and any remaining balance will be settled through debt funding”.
Phumelela’s share price on the JSE was yesterday unchanged at R22.10 a share.
Phumelela says its shareholders have approved the acquisition of the stake in Supabets.