Aldar Properties and Sorouh Real Estate said on Sunday they have initiated talks of a possible merger backed by the government of Abu Dhabi.
A team will be formed to study the legal and commercial aspects which will provide recommendations to their respective boards. The study will take three months and will be conducted in coordination with relevant government bodies, the companies said in a joint statement.
Aldar shares jumped 7.96 per cent closing at Dh1.24 at ADX today, recovering 33 per cent to date this year after falling 60 per cent last year. Sorouh shares also rose 7.96 per cent to ending the day at Dh1.24, rising 44 per cent in 2012 after losing 48 per cent in 2011. Last year, the company received Dh36 billion in government support with the company selling assets, including the Ferrari theme park, to the government.
Earlier this month, Moody's Investors Service upgraded Aldar’s outlook to positive from negative, saying, “The asset transaction agreements with the government of Abu Dhabi announced in December 2011 eliminate significant market and execution risk and will allow Aldar to reduce its debt load to an estimated Dh4.5bn by 2015.”
Aldar recorded a full-year net profit of Dh642.5 million in 2011, while total asset at the end of last year stood at Dh40 billion.
In February, Sorouh Real Estate said net profit hit Dh383.3million in 2011, up from Dh16.2 million in 2010, driven by delivery of Sun and Sky Towers. Revenues for the period were Dh3.8 billion, compared with Dh1.2 billion for the previous year, while total assets stood at Dh14 billion by end-2011.