Aldar and Sorouh will now apply for a resolution of the UAE Minister of Economy approving the merger and the associated steps required to implement the merger including the dissolution of Sorouh, the increase in the share capital of Aldar and the amendments to Aldar’s articles of association.
On the effective date of the merger, Sorouh shares would be delisted from the Abu Dhabi Securities Exchange and Sorouh would be dissolved as a legal entity. Aldar will then be named AldarSorouh Properties.
The proposed members of the AldarSorouh board are:
- Chairman: Abubaker Seddiq al-Khoori
- Vice-chairman: Ali Eid al-Mheiri
- Board member: Mubarak Matar al-Humairi
- Board member: Sultan Ahmed al-Jaber
- Board member: Ali Majid al-Mansouri
- Board member: Mohammed Haji al-Khoori
- Board member: Saeed Abdulla Sulayem al-Falasi
- Board member: Mansour Mohamed al-Mulla
- Board member: Ahmed Khalifa Mohamed al-Mehairi
- Board member: Martin Lee Edelman
The management team will be:
- Deputy chief executive officer and chief portfolio officer: Mohamed al-Mubarak
- Chief finance officer: Greg Fewer
- Chief strategy officer: Paul Warren
- Chief operations officer: Fahed al-Ketbi
- Chief development officer: Gurjit Singh
A chief executive officer will be appointed at a later date.
The merger is currently expected to be completed in June 2013. The boards of directors at Aldar Properties and Sorouh Real Estate unanimously agreed to merge in January. The merger of Aldar Properties and Sorouh Real Estate has been expected since March 2012 when the two companies announced their intention to join forces.
The deal will create Abu Dhabi’s most influential private sector client for construction companies with a land bank of 77 square kilometres and more than $11bn of projects currently being built.
The merger would create one of the largest listed real estate companies in the region with AED47bn of assets as of September 2012, and a combined market capitalisation of AED10.9bn – based on share prices on 17 January 2013.
The merged entity will be the fifth-largest listed company on the Abu Dhabi exchange by market capitalisation and the third-largest publicly listed real estate developer in the region behind Qatar’s Barwa Real Estate and Dubai’s Emaar properties.
Over the past four years, the two companies have been forced to shelve work on major projects such as Al-Raha Beach and Shams Abu Dhabi. According to regional projects tracker MEED Projects, the value of construction work awarded by the two companies fell from $10.6bn in 2008, to $1bn in 2012. There are more than $26bn of projects that are currently on hold or cancelled.
The two companies have received substantial state support during the downturn. Both have been given government contracts to develop housing schemes for UAE nationals, deals that have given both entities much needed cashflow.
Both have also received payments from the government for the transfer of assets. On 21 January, the government agreed to a AED3.2bn deal with Sorouh for the transfer of assets. Of this, AED1.6bn will cover infrastructure at Shams Abu Dhabi, and the remaining AED1.6bn will cover properties at the Gate development, which will be completed this year.
In 2011, Aldar received $9.8bn from the Abu Dhabi government and sold some of its assets to the state, including the Ferrari World theme park.