Grand Parade Investments buyout offer fair — KPMG

The mandatory buyout offer for Grand Parade Investments (GPI) has been deemed fair by the independent expert, which could help new anchor shareholder GMB Liquidity Corporation fortify its already dominant position.

GMB, headed by former investment banker and gaming sector enthusiast Greg Bortz, has in recent months acquired a stake of nearly 49% in GPI. Despite this development triggering a mandatory offer to GPI’s minority shareholders, GMB has reiterated that there are no current plans to delist GPI from the JSE.

The big question is whether casino giant Sun International, which recently built a 23.83% stake in GPI, will see its share into the mandatory offer. There has been no official word from Sun, but the company has long coveted GPI’s significant minority stake in Sun Slots (an alternative gaming group 70%-owned by Sun).

In the highly unlikely event of all minority shareholders accepting the mandatory offer, GMB will need to fork out just more than R1bn to fund the transaction.

A just-released offer circular contained an opinion from independent expert KPMG Services that reckoned GMB’s 333c a share offer was fair to GPI shareholders.

GPI’s share price was trading at 325c on Monday, reflecting the recent payment of a 12c a share dividend earlier this month.

KPMG Services director Heather Carswell said a valuation range of 316c-358c a share had been established for GPI’s shares. The “most likely” value was set at 337c.

In addition, the circular noted that GPI directors that hold shares in their personal capacities intended to dispose of these holdings in the mandatory offer.

GPI was already in the throes of unlocking value for shareholders through the sale of its investments when GMB took a tilt at control of the group. In the past 24 months GPI had sold its stake in Burger King SA, closed smaller and unprofitable investments as well as unbundled its stake in restaurant franchiser Spur Corporation.

GPI directors said GMB’s mandatory offer was seen as being aligned with group’s stated strategy to unlock value for shareholders — “while still allowing GPI shareholders the choice to remain GPI shareholders or to realise their investment”.

GMB has already indicated that it would like GPI to remain as a gaming investment company — and there has been speculation that the new majority shareholder could look to reversing other gaming assets into GPI. GMB has become a prime mover at horse racing business Kenilworth Racing, where its partner is sports betting powerhouse Hollywood Bets.

GPI’s present portfolio gives GMB a solid platform from which to build out further gaming interests. GPI holds a 30% stake in the strong performing limited payout machine (LPM) specialist Sun Slots (which has six route operators in Gauteng, KwaZulu-Natal, Mpumalanga and the Western Cape) and a 15.1% stake in SunWest (which holds the cash spinning GrandWest casino in Cape Town and the Table Bay Hotel).

Smaller investments include a 15.1% stake in the Golden Valley Casino in Worcester and a 26% shareholding in Infiniti Gaming Africa (a supplier of casino management and jackpot system solutions) as well as two properties (Heerengracht Street in central Cape Town and Thor Circle in Epping).