Arabtec Agrees to Dh6.4b Aabar Acquisition Offer

Arabtec, which was involved in the construction of the world’s tallest tower Burj Khalifa, said in a statement that: “Closing of the transaction is only subject to completion of legal diligence by January 13, 2010, and Arabtec shareholder consents through an EGM and obtaining the necessary regulatory approvals.”

“The transaction will further consolidate Arabtec’s market leading position in its industry and marks Aabar’s industry leading position as a diversified investment group,” said Arabtec, the Dubai-based company, which just a week ago strongly denied reports of any acquisition bid by Aabar.

Arabtec’s CEO Riad Kamal was quoted by Zawya Dow Jones as saying that the Aabar offer would be dilutive for shareholders “but will provide capital for investments and acquisitions.”

Arabtec’s statement on Saturday — a day after Aabar’s announcement that it would acquire 70 per cent of the Dubai construction firm through convertible bonds— said the bond would be for a fixed purchase price of Dh2.3 per share.

“…accordingly, the share capital will be increased from Dh1,196,000,000 to Dh3,986,666,667 (representing conversion of the mandatory bond so that Aabar Investments PJSC will own 2,790,666,667 shares or 70 per cent of Arabtec Holding PJSC total shares after conversion of the bond) for a total investment consideration of Dh6,418,533,333.”

Arabtec said formal discussions between the two parties commenced on January 4, culminating in an agreed position on January 7.

On Friday Aabar said the deal would provide both cash and potential new contracts for the Dubai builder. Aabar’s acquisition of the Arabtec is the latest in a series of high-profile deals worth Dh25 billion hammered by the government-owned investment company last year. These include stakes in the German car maker Daimler, the UK aerospace firm Virgin Galactic and 30 per cent of Brawn GP Formula One last November.

Aabar is the non-energy investment arm of Abu Dhabi sovereign wealth fund IPIC.

On Friday, Credit Suisse said in a note that Aabar would give a welcome cash injection to Arabtec through the deal, and could help provide new contracts for it in Abu Dhabi. It also said the conversion price for the convertible bond would mean a 20 per cent discount to the closing price of Arabtec on January 7 of Dh2.89 per share.

There had been market rumours since late December regarding a possible investment by Aabar in Arabtec but both firms had denied there had been any deal.

Arabtec, which has ventured into new markets such as Russia, Qatar and Saudi Arabia as the global downturn hit business at home in Dubai, had said it would turn its main focus to other locations including Abu Dhabi where it won contracts last year.

issacjohn@khaleejtimes.com