Aldar Properties merger with Sorouh Real Estate creates largest listed real estate developer in Abu Dhabi - IFN

Aldar Properties merger with Sorouh Real Estate creates largest listed real estate developer in Abu Dhabi

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UAE: Now trading under a single symbol of ALDAR, the Aldar Properties and Sorouh Real Estate merger which received shareholder approval in March this year, has created the second-largest real estate developer in the UAE and the largest listed real estate entity in Abu Dhabi. Worth AED46 billion (US$12.52 billion), the merger was declared effective by the Ministry of Economy at the close of trading on the 27th June. Aldar’s shares rose by 1.4%, recording a change of 0.03 at 7.52am Abu Dhabi time, today. The real estate developer’s shares were also the most-traded among the other real estate companies listed on the Abu Dhabi Exchange; namely Eshraq Properties and RAK Properties which closed on a negative note at -3.85% and -1.82% respectively. 3.38 billion new Aldar ordinary shares have been issued to those shareholders of Sorouh, and the new number of outstanding Aldar ordinary shares following the capital increase is 7.86 billion. The assets and liabilities of Sorouh have been transferred to Aldar, following its dissolution, while the outstanding balance from its AED2.1 billion (US$571.72 million) financing facility has been negotiated upon, and the interest margin on the facility which was taken on the 28th June 2010 was reduced to 2.45% from 4.5%. According to one of the deal’s lawyers, Mohammed Al Shukairy, partner at Clifford Chance, the transaction is significant for the Abu Dhabi real estate market and for the UAE mergers and acquisitions market in general: “From a technical perspective, the statutory all-share merger is ground-breaking in the UAE. This transaction paves the way for a more effective (and now a tried and tested) method of merging UAE-listed companies. The statutory merger structure mitigates against, and in some cases eliminates, execution risks in a number of important areas that were associated with previously-used structures. Furthermore, it potentially delivers a better platform for integration following the merger. This is particularly interesting given the need for consolidation in a number of sectors in the UAE.” The government of Abu Dhabi is expected to continue being a key customer of Aldar’s in its bid to fulfil the development efforts of Abu Dhabi’s Vision 2030 program.