| |
EMAAR Properties has pushed Dubai’s index to its biggest fall in more than seven months on concern that the stock of the Middle East’s biggest property developer may be suspended or diluted before a merger.
Dubai-based Emaar’s stock fell 10%, the maximum daily limit allowed, after Emaar Properties said yesterday on the Dubai Financial Market’s website its proposed merger with Dubai Holding subsidiaries Dubai Properties, Samar Dubai and Tatweer would create a group with an asset base of 194-billion dirhams (52,8bn) and debt of 13,4-billion dirhams, about 7% of total assets.
The proposed consolidation would “create a robust and strategic asset base while joining the strengths” of the various companies, Emaar said.
The deal, first outlined on Saturday by Emaar, marks a push to shore up Dubai’s property market, which saw values plunge as much as 40% in the first quarter as the global economic meltdown hit the semiautonomous city-state hard.
Layoffs in Dubai’s largely expatriate workforce aggravated oversupply of residential units, squeezing prices.
A tougher financing climate also led to project delays and cancellations. Fallout from overall economic weakness further tarnished the image of an emirate whose famed artificial islands, soaring skyscrapers and rampant consumerism helped cast it as a rising global business powerhouse.
“Investors are worried a merger may mean a long share halt as with Amlak and Tamweel,” said Mohamed Dwaikat, a broker at Al Fajer Securities in Abu Dhabi. “There is also concern about a possible dilution of the shares.” Amlak Finance and Tamweel, the biggest United Arab Emirates mortgage firms, have not traded since November pending a planned merger.
The Dubai financial market general index lost 6,1%, the biggest fall since November, to 1745,07, cutting the gain this quarter to 11%. A
bu Dhabi’s ADX general index retreated 2%, paring this year’s advance to 7,7%.
Shares of Emaar, which makes up about 20% of Dubai’s index, fell to 2,89 dirhams. Al Mal Capital suspended its recommodation, saying the planned merger was “potentially dilutive” for Emaar shareholders.
“We are sceptical of the potential synergies accruing from this deal as it is our understanding that Dubai Holdings has already undergone significant restructuring,” Al Mal analyst Bobby Sarkar said. Dubai Holdings is a 100% state-controlled entity, while Dubai’s government owns about 32% of Emaar.
Emirates NBD, the UAE’s biggest bank by assets, lost 4,8% to 3,37 dirhams. Aldar Properties, Abu Dhabi’s largest real-estate developer, slid 4,9% to 3,49 dirhams, its lowest close since May 4.
Saudi Arabia’s Tadawul all share index fell 2,5% to 5461,16 after midday in Riyadh yesterday, heading for the lowest close since April.
The Kuwait Stock Exchange index fell 0,6%, and the Bahrain all share index fell 1,5%. Oman’s Muscat Securities Market 30 index sank 1,1%, bringing the four-day fall to 3,1%. Qatar’s Doha Securities Market index fell 1,2%. Bloomberg, Sapa-AP
|
Email this article
Printer Friendly Version
