The proposed acquisition of Peermont Holdings Proprietary Limited ("Peermont") by Sun International Limited ("Sun International") was positioned as one of the most significant consolidations in South Africa's hospitality and gaming sector in recent years. However, it also serves as cautionary tale for those contemplating mergers in highly regulated and concentrated industries. While the transaction itself was strategically sound from a commercial point of view, it was ultimately derailed by intense competition scrutiny and the complexities of merger control procedures.
Both Peermont and Sun International are major players in the industry: with Sun International operating several of the country's leading casinos, hotels, and resorts, including Sun City in the North West and Times Square in Gauteng, while Peermont owns a number of prominent casino-hotel complexes, most notably Emperors Palace near OR Tambo International Airport.
Valued at approximately ZAR7.3 billion, the transaction would have significantly expanded Sun International's gaming footprint in Gauteng and strengthened its scale in the national market. However, after almost two years of engagement between the parties, the deal was ultimately abandoned in July 2025.
Sun International, through its subsidiary Sun International (South Africa) Limited, had initially announced its intention in late 2023 to acquire the entire issued share capital of Peermont. The deal was framed as a strategic opportunity to enhance its gaming revenue and consolidate operations. However, the Competition Commission (the "Commission"), following its review, recommended that the Competition Tribunal (the "Tribunal") prohibit the merger on the basis that it would substantially lessen or prevent competition in the relevant markets.
From a competition law standpoint, the case illustrates fundamental principles. In its findings, the Commission noted that the merger would reduce the number of national casino operators from three to two, with Sun International and Tsogo Sun together controlling approximately 92% of the casinos operating in South Africa. The Commission warned that such concentration in an already concentrated market could foster coordinated behaviour between the remaining players, undermining competitive dynamics. It also highlighted the significant regulatory and structural barriers to entry in the casino sector, particularly the limited availability of new casino licences, which would further entrench the dominance of the merged entity and its main rival.
On 2 July 2025, Sun International announced that the parties had reached a mutual agreement to terminate the transaction. A central factor in this decision was the scheduling of the Tribunal hearing. Although the contractual "longstop date" was set for 15 September 2025, the final hearing was scheduled for 2 October 2025. In light of this, the parties agreed that proceeding with the transaction was no longer commercially viable and elected to abandon the deal immediately. Sun International stated:"Accordingly, as the hearing date is after the regulatory longstop date, the parties have mutually agreed to the immediate termination of the proposed transaction."
Prolonged interlocutory litigation and "deal fatigue" were also cited as key contributors to the transaction's collapse. The parties faced an extended period of regulatory uncertainty, the prospect of litigation, and a strong recommendation from the Commission to prohibit the merger, all of which diminished the commercial rationale for proceeding.
According to the Tribunal, the initial hearing dates set for May and June 2025 could not proceed due to ongoing discovery disputes between the parties. Further proposed dates in July and August also fell away due to the unavailability of the parties' respective legal teams. The merger parties subsequently proposed hearings from 25 August to 4 September 2025, with a decision to be issued by 15 September. However, this proposal was opposed by the Commission and Tsogo Sun, who argued that the proposed timetable was impractical and would unfairly prejudice them. The Tribunal ultimately scheduled hearing dates from 25 August to 1 September, with closing arguments on 2 October.
For those considering mergers, particularly in concentrated or highly regulated industries, this case offers several important warnings:
- Parties must conduct a thorough competition law risk assessment at the outset, and not only consider market shares but also potential barriers to entry and the likelihood of regulatory intervention;
- Proactive and transparent engagement with competition authorities can help to identify and address concerns early, potentially facilitating a smoother review process;
- Parties must anticipate and plan for procedural delays, including discover disputes and scheduling conflicts, which can derail even the most well-conceived transactions;
- Milestones, such as longstop dates, should be carefully aligned with expected duration of regulatory processes to avoid commercial and legal misalignment; and
- Parties must be prepared for the possibility that regulatory approval may not be forthcoming, and have contingency plans in place to mitigate the commercial risks.
While the merger presented clear strategic benefits for the parties involved, the transaction was ultimately abandoned before it could be adjudicated by the Tribunal, which is an illustration of how regulatory scrutiny, procedural delays, and commercial timing pressures can collectively derail a transaction, even where strategic alignment exists. In addition, it also highlights the importance of proactively managing competition risks and aligning regulatory timelines with deal milestones, particularly where the industry is highly concentrated and approval processes are complex.
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