Emaar in talks to protect shareholders amid merger move

Emaar Properties will hold talks with the Securities and Commodities Authority (SCA) to ensure that all rights of existing shareholders are protected, the company chairman has said.

"Emaar, together with its advisors, will ensure that the rights of the minority shareholders are not only protected but the transaction results in a significant value accretion to its existing shareholders," Mohamed Alabbar said in a statement to the Dubai Financial Market.

Emaar said on Sunday the entity resulting from a proposed merger with three units of Dubai Holding, owned by the emirate's ruler, will have combined assets worth AED194bn ($52.85bn).

The proposed new entity combining Emaar with Dubai Properties, Sama Dubai and Tatweer, would have debt obligations equivalent to around seven percent of total assets, compared with Emaar's 15 percent at the end of March, Alabbar added in the statement.

But shares in Emaar, the largest listed Arab developer, lost nearly 10 percent on Sunday as investors worried about asset valuations in the deal and risks in the Dubai real estate sector, which suffered a sharp correction in the global financial crisis.

Alabbar said the planned merger would allow for "increased financial strength and scale to pursue and bring to fruition value-enhancing growth plans domestically and internationally."

The developer has appointed Royal Bank of Scotland to advise on the consolidation process. The company has also assured that appropriate disclosures will be made in respect of transaction details.

On Saturday, Emaar Properties said it expects to complete the proposed merger with three Dubai Holding entities — Dubai Properties, Sama Dubai and Tatweer — within four months.

The move has prompted speculation about the future of Dubai's state-owned developer Nakheel, which has said it is receiving funds from a $10 billion Dubai bond issued to raise cash for state-linked companies hit by the financial crisis.

A tentative timeline for legal and financial due diligence of the entities is by September; valuation exercise by August; completion of legal documentation by September and agreement with regulatory authorities in respect to the structure and the process by October followed by shareholders approval also by October, said an Emaar statement.

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