By Andy Sambidge
Developer ups value of synergies from merger by 45%, estimated at $40m annually
Abu Dhabi developer Aldar Properties on Tuesday raised its estimate of the value of synergies from its merger with Sorouh by 45 percent to AED145-150m ($39.5-40.9m) annually.
The figure has been revised "based on stronger than expected operational synergies and revised lower cost of debt acquired in the acquisition, a significant proportion of which will start to be realised in 2014," Aldar said in a statement.
The merger occurred in June last year.
"The company's initial per annum synergy estimate of 90-110 million dirhams by 2015 was derived principally from operational efficiencies and interest savings on acquired debt," the statement added.
Aldar said the merger would create greater value for all shareholders and stakeholders by developing a "more diversified and sustainable business model".
Abubaker Seddiq Al Khoori, chairman of Aldar Properties said: "I am confident that we now have the right team and business processes in place to maximise stakeholder value by creating and managing quality developments."
Paul Warren, Aldar's chief strategy officer, added: "This was an extremely complex integration of two very large businesses, and the ability to extract so much value from the integration is a testament to the hard work and commitment of the teams who have been working together."
The debts of the two companies were integrated and the strength of the combined company was recognised by the rating agencies with upgrades from Moody's and S&P.
Aldar said it has seen a significant reduction in the cost of debt of both the acquired company debt and more broadly across the entire capital structure.
Since the merger, the company has repaid AED6 billion of debt and raised new debt of AED2.7 billion and AED4 billion of undrawn committed liquidity facilities.For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.