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Wed 18 Nov 2009 04:17 PM

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Dubai's Drake buys into German firm, eyes more

Drake pays $39m for 82% in Passavant Roediger, sees another deal by year-end.

Dubai's Drake buys into German firm, eyes more
GERMAN BUY: Drake specialises in mechanical, engineering and plumbing businesses.(Getty Images)

Dubai's
Drake and Scull International

bought an 82 percent stake in a German waste treatment firm and said it expected at least one more acquisition for up to $20m by the year-end.

Drake

paid AED145m ($39m) for control of Passavant-Roediger which specialises in wastewater, water and sludge treatment technologies, in what was its first acquisition.

Drake

- which specialises in mechanical, engineering and plumbing businesses and listed on the Dubai Financial Market in March - has been expanding outside its home market as it looks to diversify its portfolio and weather the financial downturn.

"I would say at least one (more acquisition) by the end of the year in Kuwait or Qatar, close to 70-75 million dirhams," chief executive Khaldoun Tabari told Reuters, adding the target would be a mechanical, engineering and plumbing company in Kuwait or Qatar.

Outside the Gulf, Drake won its first contract in Thailand in September and also operates in Sudan, and is looking to win its first contract in Libya, where it has an office. "In Libya we are bidding for six or seven projects. Libya has its own pace. Hopefully we'll have something there sooner rather than later," Tabari said.

"Less than 30 percent of homes in the MENA (Middle East and north Africa) region are connected to water and sewage compared to in Europe and the U.S. which is 90 percent, perhaps up to 97 percent. This gap needs to be addressed," Tabari told reporters.

The Passavant-Roediger acquisition would be financed 50 percent through its own cash and 50 percent through loans by three or four local banks, he said, declining to say which.

Passavant-Roediger operates in 13 countries in Europe, the Middle East, north Africa and Asia and has a project backlog of 450 million dirhams.

"The most important acquisitions are the ones that will come in the coming months or so and will bring additional market penetration in the Gulf," said Roy Cherry, vice president research, real estate and construction at Shuaa Capital. "This acquisition is more about acquiring know-how," Cherry said.

Tabari told Reuters he expected revenues for 2009 to reach AED1.8-2bn, adding the firm's project backlog globally was currently around AED3bn.

In August,
Drake

said it was bidding for contracts worth about 700 million dirhams in the Gulf and said the first of three planned acquisitions in the region would happen by the end of September.

Drake

made a net profit of 71 million dirhams in the third quarter. The firm's shares closed unchanged at 1 dirham on Wednesday. (Reuters)

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