After weeks of waiting, Abu Dhabi's two largest property developers Arabtec and Sorouh have won shareholder backing to agree a merger in a second round of voting with a final merger set for three months time.
Merger of Abu Dhabi's property giants Aldar and Sorouh gets go ahead
After weeks of waiting, Abu Dhabi's two largest property developers, Aldar and Sorouh, have won shareholder backing to agree a merger in a second round of voting with a final agreement in three months.
At consecutive extraordinary general meetings held yesterday at the Yas Rotana hotel, both companies achieved the shareholder backing needed to push the merger through, creating a mega company with assets of Dh47 billion (US$12.8bn) and a market cap of Dh10.9bn.
An Aldar company spokesman said both sets of shareholders approved the merger "unanimously". Aldar and Sorouh agreed to merge in January to form AldarSorouh after studying a tie-up for almost a year.
Under the terms of the agreement, Sorouh's assets will be transferred to Aldar and Sorouh will then be delisted as a company and dissolved.
Aldar will then issue 3.38 billion shares to Sorouh shareholders, translating as 1.288 Aldar shares for every Sorouh share they hold.
Last month merger negotiations hit a snag when an insufficient number of investors turned up to vote at two initial extraordinary general meetings that required a 75 per cent quorum of shareholders by shareholder capital.
But with a lower requirement in the second round that just 50 per cent of shareholders vote in favour, yesterday's votes passed easily. In a joint statement yesterday, the companies said that they expected the merger to be completed in June.
The companies said they would now apply for a resolution of the UAE Minister of Economy approving the merger.
They also said they would press ahead with other key administrative steps such as the dissolution of Sorouh, the increase in the share capital of Aldar and the amendments to Aldar's articles of association.
Officials also announced yesterday that the majority of AldarSorouh's new management team had been selected.
Mohamed Al Mubarak, Aldar's current chief commercial officer will become deputy chief executive and chief portfolio officer, and the company's chief financial officer, Greg Fewer, will retain the title for the merged company. Meanwhile, Paul Warren, the chief strategy officer for Sorouh, will keep the job for AldarSorouh and Fahed Al Ketbi, Sorouh's chief commercial officer, will take on the role of chief operations officer.
Sorouh's current chief operating officer, Gurjit Singh, will become chief development officer.
The company added that it was still in the process of recruiting a chief executive and other management.
"The merger will create a strengthened, more diversified company with a portfolio of revenue-generating assets and a very strong development pipeline that is able to take advantage of sustainable growth opportunities and bring greater value for our stakeholders," Aldar chairman Ali Eid Al Mheiri said yesterday.
"This vote of confidence underlines the strong strategic rationale for uniting these two companies," Mubarak Matar Al Humairi,the chairman of Sorouh added. "Aldar Sorouh will combine complementary high quality assets and strong management capabilities. The immediate focus of Sorouh's board and management team is to now successfully deliver this merger."
Analysts were unsurprised by the results of the extraordinary general meetings.
"Usually in the first round companies don't meet quorum, but they meet it in the second. This was always going to happen. The market is expecting the merger and the government is behind it," said Tariq Qaqish, the deputy head of asset management, at Al Mal Capital.
"The amount of development going on shows how serious the government is about making this happen."