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SABMILLER MULLS OPTIONS FOR $1.04BN TSOGO SUN STAKE

SABMiller plc, the world’s second-biggest brewer, says it is considering options for its $1.04 billion stake in hotel and casino operator Tsogo Sun Holdings Ltd as it reported beer revenue that missed estimates.

Tsogo Sun has more than 90 luxury hotels in seven African countries including Nigeria and the Seychelles. Its interests include Montecasino, Johannesburg’s Tuscany-themed hotel, theatre and casino complex.

The 39.6 percent holding in the Johannesburg-based company is “not considered to be core to the beverage operations of SABMiller,” the maker of Peroni, Grolsch and Castle Lite said in a statement. There’s no certainty any action will arise from the strategic review, SABMiller said.

The possibility that the brewer may consider selling its stake in Tsogo Sun increased after SABMiller merged the company with Gold Reef Resorts Ltd. in 2010, a transaction that reduced its stake from 49 percent. Tsogo Sun’s other main investor is Hosken Consolidated Investments Ltd., which owns about 41 percent, according to the company’s website.

“It’s unlikely that one single entity will take up all those shares, as there’s not a lot of buyers around with that kind of cash and empowerment credentials in place,” said De Wet Schutte, a Cape Town-based analyst with Avior Research (Pty) Ltd. He has a neutral recommendation on Tsogo Sun.

SABMiller’s revenue increased 3 percent in the year and 2 percent in the fourth quarter, missing the median estimate of analysts for a 4 percent increase for both periods. The brewer is seeking to offset sluggish consumption in Europe and the US with sales in faster-growing parts of the world.

“The miss is bigger than we expected,” Jonathan Fyfe, an analyst at Mirabaud in London, wrote in a note, citing a market slowdown in Africa as a concern. “We suspect our full-year 2015 earnings forecasts probably need to come back a bit.”

“This is a legacy thing for SAB,” said Schutte. “They’ve never been very active in Tsogo Sun, but there’s been a change of leadership at SABMiller and maybe with that there’s been a change of approach to these non-core assets.”

Source: Business Day