Monday, Jun 29, 2009
Gulf News
Dubai: The property entity due to be formed by October, through the proposed merger of Emaar, Dubai Properties, Sama Dubai and Tatweer, will have a combined asset base of Dh194 billion.
Dubai Properties, Sama and Tatweer have a solid landbank which will contribute positively to the consolidation, Emaar chairman, Mohammad Al Abbar, said on the Dubai Financial Market (DFM) website yesterday.
The three developers, excluding Emaar, had a total asset book of Dh126 billion at the end of 2008 and an external debt of Dh3.4 billion. This is just 2.7 per cent of the total assets of all three companies.
Although the four will join assets, they will also have to share debt - Dh13.4 billion of debt to be exact.
Following the statement, Emaar's shares tanked yesterday, closing at Dh2.89, a 9.97 per cent fall.
Industry experts say the fall may be attributed to the potential lack of control Emaar shareholders will have in the new group.
"I think it's because of the lack of control shareholders in Emaar will have. So there will be a dilution of interest in the shareholders of Emaar&I don't think it's a sentiment thing, it's a lack of control thing," Nicholas Maclean, managing director of CB Richard Ellis, said.
Emaar, the only developer of the four to be listed on DFM had total assets worth Dh68 billion at the end of March and a debt obligation of Dh10 billion.
Al Abbar stressed that minority shareholders in Emaar would be protected and that the transaction would result in a "significant value accretion" to existing shareholders.
The news of the proposed merger may not have come as a massive shock to the market as many developers have been fighting an uphill battle in recent months, with cash flow issues, a lack of investor confidence and the increasingly difficult task of completing a plethora of projects on time.
By Suzanne Fenton, Staff Reporter
Gulf News 2009. All rights reserved.
