Aabar snaps up 70% of Arabtec shares

Aabar acquires majority stake in Arabtec

Abu Dhabi-government owned Aabar Investments has acquired 70% of Dubai-based Arabtec Holdings' shares (post-conversion) by way of a convertible mandatory bond for a fixed purchase price of AED2.3 (US $0.626) per share.

Accordingly, the share capital will be increased from AED1,196,000,000 to AED3,986,666,667 (representing conversion of the mandatory bond so that Aabar will own 2,790,666,667 shares or 70% of Arabtec’s total shares after conversion of the bond) providing Arabtec with a cash injection of AED6,418,533,333.

The transaction values Arabtec at around US $2.5 billion.

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Formal discussions began on January 4 with an agreement being reached last Thursday (Jan 7). Closing of the transaction is subject to completion of legal diligence by 13 January after Arabtec shareholders consent through an EGM and obtaining the necessary regulatory approvals.

In previous reports, investment analysts have said that a major reason for the deal is because Aabar Investments can open up a host of work opportunities for Arabtec in Abu Dhabi and allow the company to make up any shortfalls in working capital that have resulted from payment defaults by clients in Dubai.

Arabtec said on January 5 that it may not pay a dividend this year as it is owed $544 million (AED2 billion) in arrears.

On December 30, Arabtec denied speculation that Aabar may invest in the company.