Wednesday, Apr 14, 2010
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DUBAI (Zawya Dow Jones)--Dubai's Arabtec Holding and Abu Dhabi's Aabar Investments said Wednesday they have scrapped a plan that would have given Aabar a 70% stake in the United Arab Emirates' largest construction firm by market value.
"The parties have agreed that they will no longer pursue the original transaction and will terminate the acquisition documents, effective April 14," Arabtec said in a statement posted on the Dubai Financial Market's Web site.
The companies didn't give a reason for the cancellation of the deal. Arabtec Chief Executive Riad Kamal and Chief Financial Officer Ziad Makhzoumi didn't answer calls Wednesday. Kamal said as recently as last month that the deal between the two companies was still on.
"I don't think the deal rationale was very convincing from Aabar's perspective, however I wouldn't be surprised if the market reacts favorably today," Saud Masud, head of research and senior real estate analyst at UBS.
Arabtec agreed in January to sell a 70% stake worth 6.4 billion U.A.E. dirhams ($1.74 billion) to Aabar, the largest shareholder in Daimler AG (DAI.XE).
Arabtec has been hit hard by a severe downturn in Dubai's property market where prices have slumped close to 50% and many projects are on hold. The construction firm is also one of Dubai World's biggest trade creditors and is owed more than AED1 billion from the conglomerate and other U.A.E.-based developers.
Last month, Arabtec welcomed government plans to pump $9.5 billion into Dubai World.
The Arabtec and Aabar deal is the latest of a number of deals that have been called off in the U.A.E. Last December, Dubai Holding, one of the city-state's biggest holding companies, called off a planned merger between its real-estate units and Emaar, the developer behind the world's tallest skyscraper. Islamic lenders Tamweel PJSC (TAMWEEL.DFM) and Amlak Finance PJSC (AMLAK.DFM) have been in talks to merge since November 2008.
In its statement Wednesday, Arabtec said the two companies will "continue to work together in good faith towards future cooperation and forming a strategic partnership in Abu Dhabi in the future."
Aabar, listed on the Abu Dhabi bourse, is majority owned by Abu Dhabi government firm International Petroleum Investment Co. and makes non-energy investments for the company.
Arabtec shares closed trading Tuesday 1.5% lower at AED2.65. Aabar shares closed up 0.4% at AED2.37.
-By Stefania Bianchi, Dow Jones Newswires; +9714 446-1690; tim.falconer@dowjones.com
Copyright (c) 2010 Dow Jones & Co.
(END) Dow Jones Newswires
14-04-10 0555GMT
