UAE’s Aldar, Sorouh agree to merger

  • Share via facebook
  • Tweet this
  • Bookmark and Share

The boards of the UAE’s Aldar and Sorouh, Abu Dhabi’s two largest real estate developers, have confirmed plans to merge the companies in a share swap, a statement on Monday said.

Stockholders in Sorouh, the smaller of the two firms, will receive 1.288 shares in Aldar for each one of their shares.  On the effective date of the merger, Sorouh will be dissolved and its share delisted from the Abu Dhabi Securities Exchange, with the new entity named Aldar Sorouh Properties.

Both companies’ boards of directors have unanimously recommended the merger to shareholders.

As part of the deal, Abu Dhabi’s government will also pay Sorouh AED3.2bn (US$871m). Half of this sum is reimbursement for certain infrastructure assets, while the other half is for purchases of units in Sorouh’s The Gate development.

The merger will create a company with more than AED47bn assets as of September 30 last year and a market capitalisation of AED10.9bn, based on closing share prices on 17 January. The combined entity will have a diversified portfolio of assets with total equity of AED 14.7bn, the statement added.

Government-backed talks between the two developers have been ongoing for almost a year.

The merger is part of a broader move by the government to restructure Abu Dhabi's housing market, which has suffered from oversupply of higher quality units and steep declines in prices.

"Hopefully the merger will help balance the supply/demand issue that Abu Dhabi has experienced and allow the market to pick up again," said William Neill, head of real estate firm Cluttons in Abu Dhabi.

"The current position of Abu Dhabi's property cycle will hopefully make the merger a success, however it doesn't necessarily mean more mergers are needed throughout the UAE. We have to be careful that monopolies are not created with too much power that can dictate the markets and potentially deter foreign investment," he added.

Authorities in Abu Dhabi last week said they would invest more than US$90bn on housing and infrastructure in the emirate over the next five years.

Related:

Market Performance

ALDAR Properties
4.08
0.0 0.0 (%)
Join the Discussion

Disclaimer:The view expressed here by our readers are not necessarily shared by Arabian Business, its employees, sponsors or its advertisers.

Please post responsibly. Commenter Rules

  • No comments yet, be the first!

Enter the words above: Enter the numbers you hear:

All comments are subject to approval before appearing

Further reading

Features & Analysis
Do celebrity branded projects ever work?

Do celebrity branded projects ever work?

The long list of celebrity-endorsed real estate developments...

1
Is this the end of the Gulf’s Indian cash dash?

Is this the end of the Gulf’s Indian cash dash?

From currency woes to taxation loopholes closing and a clampdown...

2
Mall talk

Mall talk

Plans for Dubai’s Mall of the World have made headlines all over...

1
Most Popular
Most Discussed
  • 10
    UAE teens among the highest for obesity rates

    Everyone in UAE knows that biggest is best.

    UAE may not light up the international league tables in standard of living, education standards, press... more

    Friday, 29 August 2014 4:20 PM - Proud UAEer
  • 9
    Saudi Arabia seeks talks on hiring of Sri Lankan maids

    perhaps the unemployed saudi men or the millions of women who are not allowed to work could pick up a broom and start sweeping their own houses. more

    Sunday, 31 August 2014 3:28 PM - nice
  • 9
    Smoke-free Dubai - the big debate

    Surprisingly the only studies that show a negative financial impact of the smoking ban on the hospitality industry are sponsored by tobacco companies ... more

    Wednesday, 27 August 2014 4:19 PM - Telcoguy
  • 24
    World's most pierced man refused entry to the UAE

    Tolerance has its limits everywhere including Dubai and those who considered Dubai a lawless circus were held accountable...so thank you Dubai authorities... more

    Thursday, 21 August 2014 10:51 PM - Khalil
  • 23
    Baby NOT on board?

    Some of you cry babies need to get your own personal apartments on the plane ! You cry more then the babies I have seen in my travels. LOL more

    Thursday, 28 August 2014 9:10 AM - Jim
  • 21
    Israel “must be punished” over Gaza, says Dubai police chief

    This high moral ground that Mick is talking abt sound very familiar. May I remind Mick that the US & its British ally alone killed over 1 million innocent... more

    Thursday, 7 August 2014 4:12 PM - Mathew