Toronto-based private equity firm Clairvest Group Inc. and its Clairvest Equity Partners III LP fund entered into a memorandum of understanding to merge certain gaming assets of Clairvest Chile Limitada and Inversiones San Andres Limitada, or Valmar, with South American casino property operator Sun Dreams SA.

Under the memorandum, Sun International will hold approximately 31% of the combined entity. It may buy additional shares of the entity to increase its stake to 32% from Clairvest and Valmar for a period of 10 days after the merger.

Upon deal completion, the parties agreed that they will consider publicly listing Sun Dreams in the near future. The merged company, which will be led by Sun Dream's existing senior management for the time being, will be the sole vehicle through which the parties build their gaming business in South America.

In April, Nueva Inversiones Pacifico Sur Limitada, or Pacifico, made an offer to buy a 14.94% stake in Sun Dreams from Sun International Ltd., resulting in both companies having a 50/50 ownership of the business.

Pacifico and Sun International plan to build a casino and hospitality group with critical mass in Latin America, and they seek to capitalize on growth opportunities in the region and elsewhere through the deal with Clairvest and Valmar.