Emaar Properties and Dubai Holding are in advanced talks over a potential merger of the publicly listed company with developers Dubai Properties, Sama Dubai and Tatweer.
The proposed "combination" would assist in Dubai's aim to become a global city and will help to drive growth in construction and development, the companies said.
Royal Bank of Scotland (RBS) and Merril Lynch have been called in by Emaar and Dubai Holding, respectively, to advise on any future merger. RBS and Merrill Lynch are in the process of finalising their assessments of the merits of the proposed consolidation, including the valuation of the entities involved.
Their assessment will also include the potential transaction structures, the companies said in a joint statement yesterday. "As the discussions progress, timely updates will be provided to the market," it said.
Mohammed Al Gergawi, Chairman of Dubai Holding, said consolidating the three companies with Emaar was a "natural progression" in the evolution of the Dubai real estate landscape and would provide benefits to all stakeholders. "By joining forces, we will give the larger combined entity an unparalleled platform to optimise opportunities in its domestic and international markets," he said.
"The combined entity has a clear and concise strategy, better positioning Dubai as a world-leading hub in real estate development and management."
Mohammed Alabbar, Chairman of Emaar, said, "We believe that there could be exceptional synergies between Emaar and Dubai Holding's key real estate businesses.
"These comprehensive discussions are driven by a shared vision regarding the consolidation of our respective visible success stories to date and the creation of a world-class group which would be ideally positioned to dynamically help shape and support the ongoing development of Dubai as a world-leading hub.
"We look forward to working with Dubai Holding with a view to completing these discussions soon and ensuring value accretion to our existing shareholders".
The statement issued by Emaar and Dubai Holding said: "The proposed consolidation comes within the resolute dedication to transform Dubai into a global city since construction and development are a primary engine of growth.
"Dubai will thus rise up to the current challenges with hallmark agility and responsiveness. The consolidation of these leading real estate entities will not only build on the remarkable achievements in Dubai during the last three decades, but more importantly, marks the start of a new chapter in the annals of real estate globally."
Emaar's shares closed at Dh3.21 on Thursday, well off their Dh28.75 high, reached in September 2005.
Emaar Chief Financial Officer Amit Jain and Emaar UAE's Chief Executive, Issam Galadari, declined to comment when contacted by Reuters.
Executives at Dubai Properties and Sama Dubai could not immediately be reached for comment. Saaed Al Muntafiq, Executive Chairman of Tatweer declined to comment to Reuters.
"Given the sharp drop in project pipeline it is a good idea to right-size Dubai Holding businesses exposed to various projects," said Saud Masud, real estate and construction analyst for the Middle East and North Africa at UBS. "The merger is the right thing to do. It is a much-needed catalyst and could lead to bigger M&A activity."
Earlier this week, Peter Riddoch, CEO of Damac Properties, the Middle East's largest private developer, told the Reuters Global Real Estate Summit in London he believed prospects for consolidation in Dubai remained high as the government looked to support its property firms.
Tatweer said earlier this month the bankruptcy of its partner Six Flags, one of the largest theme park operators, would not delay a multi-billion dirham park project in Dubailand.
Dubai Holding said in February it would merge back-office operations at Dubai Properties, Sama Dubai and Mizin to cut costs. (With agencies)
Who's behind what?
- Emaar is the developer of much of what is termed New Dubai, including Arabian Ranches, Dubai Marina, The Greens, The Lakes, The Meadows, The Springs, and The Views. Its portfolio includes the $20 billion (Dh73bn) Downtown Burj Dubai, including Burj Dubai.
It has interests and investments in more than a dozen countries from China in the East to the United States in the West.
- Dubai Properties' portfolio includes Jumeirah Beach Residence and The Walk, Bay Square, and Executive Towers, in Business Bay. It is also behind Al Waha Villas in Dubailand, Culture Village, Mudon, The Villa, and Tijara Town.
- Sama Dubai's projects include The Lagoons in Dubai and the Dubai Towers. Internationally, it is developing Dubai Towers in Doha, Salam Resort in Bahrain, Salam Yiti Yiti in Oman, and Amwaj Rabat in Morocco.
- Tatweer is the main developer of the vast Dubailand project. Its leisure interests include The Tiger Woods Dubai golf course, Global Village, Universal Studios Dubai, and Bawadi. Its portfolio also includes Dubai Healthcare City among others sectors.
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