African Sun buys out Meikles' Victoria Falls Hotel stake for $15M
What's the deal? Meikles LimitedDealroom has a profile for this one. Try Dealroom →, the Zimbabwe Stock Exchange-listed retail and property group, is seeking shareholder approval to sell its 50% interest in the Victoria Falls Hotel Partnership to African SunDealroom has a profile for this one. Try Dealroom → for $15 million. The sale would complete Meikles' exit from hospitality.
Why now? A shareholder circular issued on October 9 put a price and funding schedule around talks first disclosed in June. Shareholders will vote on the Category 1 transaction at an extraordinary general meeting on October 30, with completion subject to exchange, regulatory and contractual requirements.
What's the endgame? Meikles plans to redirect proceeds into its core business: $7.8 million to retail expansion, $4 million to retiring a 13% bank loan, and $3.2 million to corporate restructuring, transaction costs and working capital. Retail accounts for 52% of the consideration.
Who's buying? African Sun is acquiring Meikles' share in the leased operating business. Its subsidiary, African Sun ZimbabweDealroom has a profile for this one. Try Dealroom →, already holds the other 50%, so the deal places the entire partnership within the African Sun group.
What's being sold? The Victoria Falls Hotel comprises 149 rooms overlooking the falls. Emerged Railways PropertiesDealroom has a profile for this one. Try Dealroom → owns the building, and the partnership holds a lease expiring on October 31, 2036, with a ten-year renewal option.
Why exit? The disposal follows earlier sales of Meikles Hotel and the group's 35% holding in Mentor AfricaDealroom has a profile for this one. Try Dealroom →, parent of Cape Grace HotelDealroom has a profile for this one. Try Dealroom →. Victoria Falls Hotel had become Meikles' sole remaining hospitality operation, leaving little scale to support management, marketing and capital spending.
What could go wrong? The board says continued ownership would require substantial capital with returns it considers insufficient for the risks. It cites significant refurbishment obligations and growing competition from internationally branded hotels in Victoria Falls.
The price: Independent adviser Corporate ExcellenceDealroom has a profile for this one. Try Dealroom → valued Meikles' stake at between $13.1 million and $13.4 million, selecting $13.2 million as its weighted figure. The $15 million nominal consideration exceeds that by $1.8 million, or about 13.6%, though deferred payments reduce the assessed present value to $14.4 million.
The signal: The deal reflects a sharpening divide between tourism growth and the capital needed to compete for it. As international brands expand room supply and raise customer expectations in Victoria Falls, Meikles has chosen to concentrate on supermarkets and property rather than fund a single hotel's defence of its market share.
Read more: equityaxis.net
Image credit: INTTraveler
