Abu Dhabi-based property developers Aldar Properties and Sorouh Real Estate announced that their boards have unanimously voted in favour of a merger to create a massive new combined entity.
The merger will create the largest listed real estate company in Abu Dhabi, with combined total assets of around Dhs47 billion and combined market capitalisation of approximately Dhs10.9 billion.
The proposed transaction would be a statutory all-share merger, with Sorouh shareholders receiving 1.288 Aldar shares for each Sorouh share they hold, the companies said in a joint statement.
Following the merger, Sorouh shares will be delisted from the Abu Dhabi Securities Exchange and the company will be dissolved as a legal entity.
Aldar will be renamed Aldar Sorouh Properties and following the issue of the new shares, Sorouh shareholders will own approximately 45.3 per cent of the new company.
In the statement, Sorouh also announced that the Abu Dhabi government has agreed to pay Dhs3.2 billion to the company, including Dhs1.6 billion reimbursement for certain infrastructure assets and the Dhs1.6 billion purchase of units in The Gate development.
Under the merger terms, the Abu Dhabi government and related entities will own approximately 37 per cent of the combined company on a fully-diluted basis.
While Abubaker Seddiq Al Khouri, managing director at Sorouh, is proposed to be the chairman of the merged company, Aldar chairman Ali Eid AlMheiri is proposed to be the vice chairman.
Aldar chairman Ali Eid AlMheiri said: “I am delighted to confirm the board’s recommendation to merge Aldar with Sorouh. The two companies are an excellent fit. They bring together complementary assets and capabilities, diversified portfolios and an enhanced asset base and balance sheet to create a stronger entity that is best positioned for sustainable growth.”
Mubarak Matar Al Humairi, chairman of Sorouh, added: “The merger takes place at the right time in the property cycle as it offers our shareholders, customers, business partners, and the people and government of Abu Dhabi a strong real estate partner that will deliver sustainable growth in this exciting market for years to come.”
The merger is still subject to a number of conditions and is expected to become effective in June 2013, the statement added.