In the most significant local hospitality deal for years, South Africa's biggest hotel and casino operator, Sun International, plans to buy rival Peermont Global for R9.4-billion.
Peermont owns Emperors Palace near OR Tambo International Airport, Johannesburg, as well as 12 other leisure and gaming complexes.
Sun International, which owns Sun City and was founded by Sol Kerzner in 1975, said it would issue 10.4 million new shares to finance the deal.
Sun International investors will also take over all of Peermont's debt, which includes R3.8-billion in existing debt.
Peermont was bought by a private equity consortium led by the Mineworkers Investment Company in 2007 and delisted that year, but it soon began struggling to repay the debt for this deal at a time of falling gambling revenue with consumers under pressure.
In November 2013 Peermont was "recapitalised" by raising R5.3-billion in new debt in a plan that the company said "will significantly enhance its long-term sustainability and allow for greater flexibility to pursue further growth opportunities".
The latest deal helps ward off a potentially nasty row between the two groups: Peermont had objected to Sun International's plan to relocate the licence for Morula from the casino in Mabopane to Pretoria. But as part of this deal, "this objection has now been withdrawn".
Sun International said the deal would enable it to "undertake larger developments and acquisitions internationally". But the company will be hoping prospects for the gambling sector improve markedly after a tough few years.
South African gross gambling revenue - which is the amount bet, minus the winnings paid - will increase 35% to R29.5-billion in the five years to 2018, according to a PwC report published last year. Casino gambling is seen as the biggest contributor, accounting for R20-billion.
The researchers said slower economic growth might subdue betting spend this year, with a pick-up expected once conditions improved.
Sun International said it "continues to operate in a subdued and challenging economic environment, in particular in its core SA business". However, gaming revenue rose 6% in January after a 1% fall the month before.
- With Bloomberg
Just R20 for the first month. Support independent journalism by subscribing to our digital news package.