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EVER since SAB moved its primary listing to London, there was speculation about the disposal of Tsogo Sun.

Speculation continued despite constant denial of any plan.

Eventually, a few months ago, SABMiller said it was reviewing strategic options for its 39.6% Tsogo stake, which is valued at about R11bn. Speculation now is that a deal will be announced “within days”.

It will have to be an extremely clever deal to satisfy all parties involved, particularly HCI, which has a 41% stake in Tsogo.

HCI boss Johnny Copelyn has said HCI doesn’t have the money to buy SABMiller’s stake.

This rules out any sort of control premium for SABMiller, which — given that it had only de jure joint control — was probably never on the cards anyway.

An unbundling would be suboptimal and messy. So an organised sell-off through a book-building exercise, with HCI’s enthusiastic backing as lead shareholder, is the most likely scenario and will improve the share’s liquidity.

HCI may want to increase its stake to below 50%, and given regulations, individual institutional shareholders will need to keep their holding below the 5%.

The shift from de jure joint control to sole control will necessitate notifying competition authorities.

Source: Business Times – Ann Crotty