Phumelela in R284m rights of­fer to fund Su­pa­bets stake

The Star Early Edition - - BUSINESS REPORT - Siseko Njobeni

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.

PIC­TURE: SUP­PLIED

Phumelela says its share­hold­ers have ap­proved the ac­qui­si­tion of the stake in Su­pa­bets.

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