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Mon 24 Feb 2014 12:04 PM

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Dubai's Arabtec in talks to buy Kuwaiti firm- sources

Deal to fully acquire Kharafi National has been valued at $545m by one source

Dubai's Arabtec in talks to buy Kuwaiti firm- sources

Arabtec Holding, Dubai's
largest listed construction firm, is in the advanced stages of talks to fully
acquire a construction company in Kuwait's Kharafi Group, two sources aware of
the discussions said.

The Dubai firm is in talks with Kharafi National, a
Kuwait-based contractor and facilities management firm which has operations in
several Middle Eastern countries, to buy all its assets and operations.

The deal, if completed, would be worth about AED2bn ($545m), one source said. However, a report in the Abu
Dhabi-based Al-Ittihad newspaper on Monday valued the possible deal at about
AED5.5bn; it quoted unnamed sources.

A formal agreement is expected in two to three
months, sources told Reuters. Arabtec declined to comment; Badr Kharafi, who
assumed control of the family conglomerate following the death of his father
Nasser in 2011, declined to comment when contacted by Reuters.

The acquisition is part of Arabtec's aggressive
regional strategy to enter partnerships and acquire competitors, and eventually
create a pan-Gulf construction firm.

The builder, in which Abu Dhabi state fund Aabar
has a 22 percent stake, making it the largest single shareholder, replaced
Arabtec's founder and chief executive Riad Kamal with Abu Dhabi-based private
investor Hasan Abdullah Ismaik last year, and embarked on an ambitious growth

Arabtec entered into partnerships with South
Korea's Samsung Engineering and GS Engineering & Construction , and has
acquired other, smaller regional companies.

Its relationship with Aabar has helped the builder
clinch several projects, including a $6.1bn deal, its biggest ever, to
build 37 towers in Abu Dhabi and Dubai.

The company last year denied media reports that it
was in talks to merge its operations with Kuwait's Combined Group Contracting
Co (CGCC) and Saudi Arabia's Saudi Oger.

Kharafi Group, which owns Kharafi National, is one
of the biggest family conglomerates in Kuwait with interests in real estate,
retail and financial services. It is thought to control, through various
entities, around a quarter of telecommunications operator Zain.

Headquartered in Kuwait, Kharafi National has
operations in the United Arab Emirates, Qatar, Saudi Arabia, Egypt, Lebanon and
Bahrain, and has a workforce of around 30,000 people.

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