Abu Dhabi de­vel­op­ers start merger ne­go­ti­a­tions

The Washington Times Daily - - Business -

DUBAI | Al­dar Prop­er­ties, the strug­gling Abu Dhabi real es­tate de­vel­oper, said Sun­day it is launch­ing talks with its smaller ri­val, Sorouh Real Es­tate, about a pos­si­ble merger.

It would be sup­ported by the Gulf emi­rate’s gov­ern­ment.

The pro­posed tie-up would unite the Emi­rati cap­i­tal’s two most prom­i­nent prop­erty de­vel­op­ers as they grap­ple with a deep prop­erty slump that has gripped the United Arab Emi­rates since prices peaked in 2008.

Al­dar al­ready re­ceived some $10 bil­lion in gov­ern­ment aid through two bailout rounds last year.

It is ma­jor­ity owned by the Abu Dhabi gov­ern­ment and was a key driver of the sheik­dom’s de­vel­op­ment, in­clud­ing its sig­na­ture project, Yas Is­land, home of the Abu Dhabi Grand Prix auto race.

The com­pa­nies out­lined plans for the pos­si­ble merger in brief state­ments to the emi­rate’s stock ex­change. They said the ne­go­ti­a­tions carry “the bless­ing of the gov­ern­ment of Abu Dhabi,” though they did not out­line what fi­nan­cial sup­port, if any, the state would pro­vide.

It was not im­me­di­ately clear how the deal would be struc­tured.

Hais­sam Arabi, chief ex­ec­u­tive and fund man­ager at Gulf­mena In­vest­ments in Dubai, said a merger could ben­e­fit both com­pa­nies.

“The com­bined en­tity would make a mega-mas­ter de­vel­oper with solid fi­nan­cials and gov­ern­ment back­ing,” Mr. Arabi said. Abu Dhabi might be will­ing to pro­vide ad­di­tional fi­nan­cial sup­port to the merged com­pany if needed, he added.

A work­ing group will be formed to study the le­gal and com­mer­cial im­pli­ca­tions of the pro­posed merger. It is ex­pected to make rec­om­men­da­tions to se­nior man­age­ment of both de­vel­op­ers within three months, the com­pa­nies said.

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