UAEs Aldar Sorouh agree on merger proposal sources

Abu Dhabi’s two biggest real estate developers have reached an initial agreement to merge, and a final deal is expected to be signed in coming weeks, three sources familiar with the matter told Reuters.

Aldar Properties and Sorouh Real Estate have a combined market capitalization of about 9.3 billion dirhams ($2.5 billion), which would make the proposed merger one of the biggest conducted by listed firms in the Middle East.

The merger would create a state-backed company with combined assets worth nearly $15 billion, and could help to repair Abu Dhabi’s weak real estate market by ensuring better coordination of new property developments.

With the support of the Abu Dhabi government, which owns a major stake in Aldar, managements of the two companies have held discussions for nearly a year on asset valuations, financial terms and the new management structure, the sources said.

The merger will be based on a share swap and will not involve a cash payment, two sources said. The terms of the share swap could not be confirmed.

The sources spoke on condition of anonymity because the matter has not been made public. Aldar and Sorouh declined to comment.

Last Update: Tuesday, 08 January 2013 KSA 17:04 - GMT 14:04