SABMiller Plc’ share price down, to sell a 40% stake in Tsogo Sun Holdings Ltd for $1.09 billion

SABMiller Plc, the second-largest brewer in the world, revealed that it will sell its $1.09 billion stake in casino and hotel company Tsogo Sun Holdings Ltd, in a bid to shift focus towards its core business.

The company had announced in April that it is considering a variety of strategic options for its shareholding in the South African hotel and casino company, which operates more than 90 luxury venues in seven African countries. There were signs that SABMiller is willing to leave the business as early as 2010, the Financial Times reported.

“Gaming and hotels are not core to our operations, and we have concluded that the time is right for us to exit our investment,” said Alan Clark, Chief Executive Officer of SABMiller Plc, cited by Bloomberg. Mr. Clark, who took over the helm in April last year, added that most of the proceeds from the sale would be reinvested in “core growth business, including African operations”, while some will be put towards covering outstanding debt.

The announcement comes after earlier this year the brewer has merged its South African unit with its wider African operation in order to improve management coordination.

Currently, SABMiller owns more than 200 beer brands all over the world, as a large number of the brands are being sold in only one or two countries.

In addition to protecting their market share in South Africa “there remains a lot of whitespace opportunity for them in Africa as well,” Philip Gorham, analyst at Morningstar, said for Bloomberg. “Kenya is an opportunity. Their presence is quite patchy, and they could look to plug some geographic gaps.”

SABMiller will log “anemic growth” for another quarter before trends improve, according to a note by Trevor Stirling, an analyst at Sanford C. Bernstein, cited by Bloomberg.

SABMiller Plc lost 0.94% to trade at 3 365.5 pence per share by 14:36 GMT, marking a one year change of +4.78%.