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Funds seek Aldar Sorouh merger clarification

Investors demand more information as companies' share prices rise

Aldar's shares have risen 12.6% in the last week amid merger speculation, while Sorouh's have risen 10%
Aldar's shares have risen 12.6% in the last week amid merger speculation, while Sorouh's have risen 10%

Fund managers want Abu Dhabi's two biggest property developers to clarify the status of their proposed $15 billion (AED 55.1bn) merger, The National reported.

The calls came yesterday after shares of both companies rose more than 10% on unconfirmed reports they had hired investment banks to advise on a deal.

Aldar Properties and Sorouh Real Estate said in March that a committee representing both groups would study the possibility of a merger.

“They haven't made an announcement as to the conclusion of the study and it would be nice to have some clarity,” said Haissam Arabi, the chief executive of the asset manager Gulfmena Investments in Dubai.

Aldar's shares rose 3.7% to $0.30 (AED 1.11) yesterday, while Sorouh's shares rose 3.8% to $0.29 (AED 1.07).

The share prices began to move as various media published unsourced reports claiming the companies had hired Goldman Sachs and other investment banks to advise on a deal.

However, it is understood that talks are ongoing between the two developers and several banks, but no decisions have been made. Spokesmen for Aldar and Sorouh declined to comment.

“The market is pricing in that this deal is going through,” Mr Arabi said. “We need information to make sure we are not moving ahead of ourselves.

“Has the study been concluded or not? They need to come out publicly and say something to that effect,” he added.

Aldar shares crept 1% higher on Thursday, 3% on Sunday and 4.9 % higher on Monday, bringing its total gains to 12.6%.

This comes at a time when overall markets have been flat or volatile amid investor worries over the euro-zone debt crisis.

Sorouh’s shares rose 2%, 5.1%, and 3.8% in the same period, bringing its total gains to 10%.

“The news leaked was so short and did not provide any additional information, keeping the door wide open for speculation and guessing,” said Wadah Al Taha, the chief investment officer at Al Zarooni Group.

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Construction Week - Issue 745
Jun 30, 2019