Abu Dhabi’s Aabar Investments and Dubai’s Arabtec Holdings have agreed for Aabar to acquire a 70 per cent stake in Arabtec for AED6.4bn ($1.7bn).

Formal discussions between the two parties commenced on 4 January 2010 and an agreement was reached on 7 January.

The transaction now depends on the completion of legal diligence by 13 January and the consent of Arabtec shareholders at an extraordinary general meeting.

In a statement to the Dubai stock exchange Arabtec says that the transaction will consolidate Arabtec’s market position in the construction industry while supporting Aabar’s diversified investment portfolio.

In late December and early January Arabtec and Aabar dismissed rumours that Aabar had taken a stake in the Arabtec after market rumours drove Arabtec’s stock price up by 20 per cent (MEED 31:12:09).

Arabtec is one of the region’s largest contracting companies with projects in the UAE, Qatar, and Saudi Arabia.

Most of its new work in 2009 came from Saudi Arabia. In June it won SR2bn ($532m) contract to build the Lamar Towers development in Jeddah, and in April it won a SR1.5bn contract at the Princess Noura Abdul Rahman University in Riyadh.

Arabtec Saudi Arabia was formed in March. It is a partnership between UAE-based Arabtec Construction and two Saudi Companies, Prime International Group Services and CPC Services Company, a subsidiary of Saudi Binladin Group.