Nearly 70 percent of Dubai's Arabtec offered to be bought by Aabar
Aabar has told that Abu Dhabi-based Aabar Investments wants to buy 70% of Arabtec through convertible bonds, in a $1.7 billion contract which would give both cash and potential new contracts for the Dubai builder.
Aabar explained, "Aabar's board has resolved to make an offer to Arabtec to acquire 70pc of the share capital of Arabtec by way of a mandatory convertible bond to be issued by Arabtec Holding to Aabar Investments at a conversion price of 2.3 UAE dirhams per share."
On Thursday, Arabtec's closing price was of 2.89 dirhams, and the present proposed price is a 20.4pc discount to it. On Thursday, the Construction Company and Aabar Investments had hiked .3pc and 5.2pc respectively ahead of board meetings, adding to earlier gains.
Credit Suisse, which has a target price of 3.33 dirhams for shares of Arabtec, said in a note that it will be through the contract that Aabar would give a welcome cash injection to Arabtec , which could assist give new contracts for it in Abu Dhabi.
German carmaker Daimler's largest shareholder is Aabar, the non-energy investment arm of Abu Dhabi sovereign wealth fund IPIC.
Analyst Ahmed Badr said, "Arabtec gets cash injection of 6.4bn dirhams which hedges the company against any shortfall in working capital resulting from potential default on payments from Dubai clients. This would also allow the company to easily secure bonding from banks for new projects."
Badr said, "Through its ties to the Abu Dhabi government, we believe Aabar can potentially give Arabtec access to a considerable pipeline of projects in Abu Dhabi, thus securing backlog growth."
Since late December, there had been market rumors about a possible investment by Aabar in Arabtec but both firms had denied these rumors.
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