Dubai-based Arabtec Holdings is considering a merger with the largest contractors in Saudi Arabia and Kuwait to create a pan-Gulf construction firm, the firm’s chief executive was quoted as saying.
Arabtec, which raised $653 million from a rights issue in July, is embarking on an ambitious expansion plan under chief executive Hasan Abdullah Ismaik who was appointed after Abu Dhabi state fund Aabar bought a 22 per cent stake last year.
“We are now looking for merger with two of the biggest construction companies in the Gulf, one in Saudi Arabia and the other in Kuwait,” Ismaik told CNBC’s Arabic news channel in an interview without naming any of the companies.
Kuwaiti newspaper Al-Qabas earlier in the day reported that the contractor is in talks with Kuwait’s Combined Group Contracting Co and Saudi Arabia’s Saudi Oger, citing unnamed sources.
A spokesman for Arabtec declined to comment on the newspaper report on Wednesday. Saudi Oger and Combined Group officials were not immediately available for comment.
Saudi Oger, owned by the family of late Lebanese prime minister Rafik al-Hariri, is one of the largest construction firms in the Kingdom. The company also has interests in telecoms through its indirect stake in Turk Telekom.
Arabtec, which is focused on expanding its business in Saudi Arabia, has worked closely with Oger on several contracts in the Kingdom and outside. A consortium which includes Arabtec and Oger won a $653 million contract to build the Louvre museum in Abu Dhabi.
The Dubai builder has also worked with Combined Group on projects in Kuwait.
One Dubai-based banking source said a deal to create a regional construction firm may not be easy because of differences in real estate regulations and the politics involved in a cross-border deal.
“It’s a good idea and this region does need to consolidate a lot of its businesses across sectors but it is going to be a very difficult one to get through the line,” the banker said speaking on condition of anonymity due to sensitivity of the matter.
“We are not aware of any bankers being involved in these discussions and it does look very preliminary if at all any talks are happening.”
Arabtec shares ended 3.9 per cent higher on the Dubai bourse on Wednesday. Shares in Combined Group were unchanged in Kuwait.