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21 April 2024

Arabtec’s merger with Aabar still on track

An Arabtec construction site in Dubai. (SATISH KUMAR)

By Reuters
Dubai contractor Arabtec's proposed merger with Aabar Investments is still on track with a possible deal closure in March and the firm expects to post better profits in the fourth-quarter, its CFO said on Sunday.

Aabar had agreed to acquire a 70 per cent stake in Arabtec last month in a deal valued at about $1.7 billion.

Shares of Arabtec, the United Arab Emirates' largest contractor by market value, have been pressured recently by sustained speculation that the deal may not go through.

"There is no reason for the deal not to go ahead," Arabtec's Chief Financial Officer Ziad Makhzoumi told Reuters in an interview.

Arabtec shares were down 3.93 per cent in early trade in Dubai while Aabar shares slipped 2.9 per cent in Abu Dhabi as Gulf stocks declined following weak cues from global markets.

Makhzoumi said the capital injection from Aabar will be used to accelerate the contractor's expansion plans and for potential acquisitions.

The contractor said it expects to post sequentially better profits in the fourth-quarter helped by cost reduction initiatives and its Saudi Arabia operations.

"We were able to deliver more in Q4, cost cutting procedures paid dividends and in Q3 we didn't have the impact of Saudi Arabia," Makhzoumi said, adding that the summer and Ramadan period also impacted activity in the third quarter.

Arabtec said it was likely to announce a new contract award in Syria this week but Mahzoumi declined to give further details.

Arabtec has won a number of contracts recently in Saudi Arabia, Abu Dhabi, Qatar and the West Bank, helping it weather the storm in its home market where property prices have fallen some 50 per cent from their peaks and billions of dollars of projects have been cancelled or put on hold.