Company denied it was in talks to create a pan-Gulf construction company
UAE developer Arabtec is not planning to merge with Kuwait Combined Group Contracting Co and Saudi Oger, a statement by the company said.
The company would like to state that there are no discussions to merge with either of the two companies and there are no current plans to do so. The company continues to review opportunities in Saudi Arabia and Kuwait and will disclose any developments in line with the regulations of the Dubai Financial Market, it said in a statement.
Kuwaiti newspaper al-Qabas reported yesterday that the companies plan to create a pan-Gulf construction company, quoting anonymous sources working in construction.
They told us in a phone conversation that the news is just speculation, amid M&A [mergers and acquisitions] activity being a regular part of the groups business, said Allen Sandeep, Research Director of Egypt-based Naeem Holding.
He added that the formation of a merger or a joint venture with a local partner usually precedes putting in bids to win new contracts.
In the past the UAE developer has already teamed up with Saudi Oger and other partners on the $654m construction of the Louvre Abu Dhabi museum and has worked with Combined Group Contracting Co to develop projects in Kuwait.
Arabtec is known as being tight-lipped about their plans until an agreement has been signed. With the funds raised through their $650m rights issue the developer is eyeing expansion, though an easier option would be to opt for acquisitions instead. The developer is rumoured to be in talks with Drake & Skull International for a potential stake acquisition, causing the latter companys stock to surge in recent weeks.
In March the Dubai-based firm appointed Shohidul Ahad Choudhury as its new M&A head, a month after shaking up its senior management.
This week it appointed former head of Aldar Properties Sami Haidar Asad as its new chief executive officer. Asad has a strong background in oil and gas, one of the main areas Arabtec is eyeing for expansion. A joint venture with Samsung Engineering, formed in April, shows it not only wants to be a major player in the regional construction sector, but also in the engineering, procurement and construction (EPC) market.
Arabtecs share price rose 3.92 per cent to AED2.65 on 21 August.
Saudi Oger and Combined Group Contracting Co could not be reached for comment.
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