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Sat 9 Jan 2010 06:09 PM

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Dubai's Arabtec says Aabar to acquire 70% stake

UPDATE 1: Dubai-based firm confirms Aabar looking to finalise deal on Jan 13 for $1.7bn.

Dubai-based Arabtec confirmed on Saturday that Abu Dhabi's Aabar Investments is looking to finalise a deal on Jan. 13 to acquire a 70 percent stake in the company for $1.7 billion.Aabar said on Friday it intended to buy the stake through convertible bonds, which would provide both cash and potential new contracts for the Dubai construction giant.

"Aabar Investments and Dubai's Arabtec Holdings have agreed for Aabar to acquire 70 percent of the shares in Arabtec by way of a convertible mandatory bond...," Arabtec said in an emailed statement.

Formal discussions between the firms began Jan. 4, the company said. Finalising the deal depends on completing legal diligence by January 13, the approval of Arabtec's shareholders and obtaining regulatory approvals, it added.

Arabtec said the acquisition will "further consolidate" its position in the market.

Credit Suisse, which has a target price of 3.33 dirhams for shares of Arabtec, said in a note that Aabar would give a welcome cash injection to Arabtec through the deal, and could help provide new contracts for it in Abu Dhabi.

Aabar, the non-energy investment arm of Abu Dhabi sovereign wealth fund IPIC, is German carmaker Daimler's largest shareholder.

There had been market rumours since late December regarding a possible investment by Aabar in Arabtec but both firms had denied there had been any deal.

Arabtec -- which has ventured into new markets such as Russia, Qatar and Saudi Arabia as the global downturn hit business at home in Dubai -- has said it will turn its main focus to other locations including Abu Dhabi where it won contracts last year.  (Reuters)

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