Depa shares were suspended yesterday after its biggest shareholder sought increased board representation, investors and brokers said.
A Nasdaq Dubai filing said the company's stock would be suspended from trading "until further notice".
It followed Depa's annual general meeting at Dubai's Emirates Towers on Monday.
Investors present at the meeting said the decision to suspend trading by the Dubai Financial Services Authority (DFSA) related to a move to increase Arabtec representation on the Depa board.
Arabtec and Depa, an interiors contractor based in Dubai, declined to comment when contacted by The National yesterday.
"The increased presence of Arabtec partners on the board will lead to increased speculation of an Arabtec bid for Depa," said Julian Bruce, a director of EFG Hermes. In February shares in Depa jumped when the EFG analysts Jan Pawel Hasman and Shaza El Kady published a note saying that Arabtec, which owns a 24 per cent stake in Depa, could increase its ownership to 100 per cent.
Shares of Depa jumped 5 per cent on Monday before they were suspended, to close at 42 cents each. Arabtec's shares rose 2.99 per cent yesterday to close at Dh2.41.
Four people spoke on behalf of Arabtec and introduced themselves as representing Arabtec's shares, sources present at the meeting said.
"They asked for a new board. They wanted to increase the number of board members to nine and put new names. The chairman [Abdullah Al Mazroui] and two others, Mohannad Sweid [the founder and chief executive] and Marwan Shehadeh [another board member]. The rest are new," said one shareholder present at the meeting who declined to be identified.
The move was expected by some shareholders after Arabtec disclosed in November that it owned 24 per cent of Depa. However, the timing and "process" took investors by surprise.
Shareholders "have to notify the board seven days prior if they want to add a new resolution to the AGM", the source said "They didn't, but it was accepted because they had a majority of Depa."
Shareholders voted on the decision, the source said. But the results are yet to be released because of a requirement for pre-approval from DFSA.
A board change usually requires the support of 50 per cent of shareholders.
DFSA and Nasdaq Dubai declined to comment yesterday.
In November Arabtec disclosed to the Dubai Financial Market, where its stock is listed, that it had agreed to buy 149.5 million shares in Depa.
That paved the way for greater co-operation between the pair, which have worked together on major projects such as Burj Khalifa. Many analysts see them as a natural fit.
Arabtec, which is 21 per cent owned by Abu Dhabi's Aabar Investments, has plans for rights issues totalling as much as US$1.3 billion as well as $450 million in non-convertible bonds if needed, which it said would fund an aggressive expansion including possible acquisitions.
Meanwhile the contractor Drake & Scull International said yesterday that it was likely to be partnering further with Arabtec in its future work amid recent speculation that it was also a possible takeover target.
Speaking to Reuters on the sidelines of a conference in Abu Dhabi yesterday, the Drake & Scull chief executive Khaldoun Tabari said he was not interested in selling but added that there would be more announcements shortly about the two firms working together.
[ halsayegh@thenational.ae ]
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