Eshraq Properties Company is in advanced talks to acquire developer Reem Investments, the two parties announced on Wednesday.
The deal would create the second largest listed real estate developer in Abu Dhabi, where the two companies are based.
The takeover would be in the form of a subscription for new shares to be issued by Abu Dhabi-listed developer Eshraq, in return for Reem’s entire business and assets, the two parties said in a statement.
The statement added that their respective boards expect to achieve cost and operational synergies from such an acquisition, from integrating their resources and expertise.
However, the agreement remains subject to a number of conditions, including the final agreement of specific deal terms including price. It also still requires regulatory approvals, the statement said.
Earlier this month Eshraq said it had recorded its first positive earnings in two years, amassing AED636,000 ($173,155) of profit in the second quarter compared to a AED101.4 million ($27.6 million) loss in the corresponding period last year.
The company was established in 2006 and listed on the Abu Dhabi Securities Exchange in 2011. It has a portfolio of diversified properties and development opportunities across Abu Dhabi and Dubai, including Marina Rise on Reem Island and The Gateway in Sas Al Nakhl.
It was reported in April that Eshraq and state investment vehicle Mubadala Development Company were exploring opportunities for establishing a joint real estate development company in Abu Dhabi to jointly develop Mubadala-owned plots on Al Maryah Island and by Eshraq Properties on Al Reem Island.
Reem was established in 2005 and is one of the largest real estate companies in Abu Dhabi, owning prime development land in Abu Dhabi.
SHUAA Capital is advising Eshraq on the potential acquisition, First Abu Dhabi Bank is advising Reem.
Eshraq chairman Jassim Alseddiqi said: “We have successfully stopped the flow of losses in Eshraq and are looking forward to the new era of growth in the company.
“With a prudent growth strategy, Eshraq will continue to expand on existing projects while increasing our pipeline of future developments to deliver strong results for our investors.”
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