Wednesday, May 15, 2013
Dubai: Arabtec Holding’s chief executive officer has been appointed on the board of directors for interiors contractor Depa after the construction company bought nearly a quarter of the firm last year — with analysts saying it could increase its ownership by 100 per cent.
Chief executive Hasan Abdullah Ismaik and Arabtec board members, Mohammad Al Fahim and Wassul Fakhoury, were also appointed on the reshuffled board after approval by shareholders at an AGM, Depa said on Wednesday in a statement on the stock exchange.
Arabtec’s chief financial officer Iyad Abdul Rahim was also appointed to the board. Marwan Shehadeh and Chris Foll were reappointed to the board while Orhan Osmansoy and Riad Kamal were removed. Ahmad Ramadan, Fawz Al Hokair, Khaldoun Tabari and Mohammad Al Fahim be appointed to the board.
Some analysts say Arabtec’s move to increase its representation on Depa’s board that it will continue to raise its stake and may eventually acquire the interiors contractor.
“We remain of the view that Arabtec is likely to reach for the reminder of Depa’s shares should it encounter any difficulties in exercising sufficient amount of control over Depa’s resources,” Jan Pawel Hasman, an analyst at EFG-Hermes Holding SAE in Cairo, said in an email to Gulf News.
Asked if this may lead to an eventual acquisition, he said: “There is no certainty but we think that Arabtec is more likely to continue consolidating its subsidiaries by buying out existing minorities which makes us believe that the company would eventually reach for Depa in its entirety should Arabtec’s management decide that it needs more control over its operations.”
As Arabtec won several civil awards in Abu Dhabi and elsewhere recently it needs increased influence over Depa’s capacity to execute these projects, he said.
“The market may interpret the move as being part of a process to raise the degree of involvement in the ownership and stewardship of Depa,” said Mohammad Kamal, director of the construction and real estate section at Arqaam Capital. “There remain considerable synergies between the two businesses, as they are complementary in terms of the segments of the industry they operate in.”
Depa recorded an 18 per cent increase in first quarter revenues to Dh446 million versus Dh378 million in the prior-year period, citing an increase in project backlog. Net profit before non-controlling interests was Dh12 million in the first three months of 2013, up from a Dh9 million loss in the same time last year.
“We have seen a strong start to the year and are making good progress especially in our contracting business in the Gulf countries, most notably Saudi Arabia. Over the past few years we have positioned the business ready for a recovering market and we are seeing a rise in the number of projects for tender,” Mohannad Sweid, chief executive of Depa said in a statement.
“It is early days and we remain cautious as to the projects we take on. Careful project selection has helped margins improve this quarter and we will continue to look for further margin improvement over time and get back to historical levels,” he said.
By Deena Kamel Yousef Staff Reporter
Gulf News 2013. All rights reserved.
