Dubai: Dubai contractor Arabtec's proposed merger with Aabar Investments is still on track, with a possible closure in March. The firm expects to post profits in the fourth quarter, its CFO said Sunday.
Aabar had agreed to acquire a 70 per cent stake in Arabtec last month in a deal valued at about $1.7 billion (Dh6.2 billion). Shares of Arabtec have been pressured recently by speculation that the deal may not go through.
"There is no reason for the deal not to go ahead," Arabtec's Chief Financial Officer Ziad Makhzoumi told Reuters, adding the capital injection from Aabar will be used to accelerate the contractor's expansion plans and for potential acquisitions.
"We are always looking at potential acquisitions, some of them will be immediate, some of them will possibly be at a later stage," he said.
Arabtec shares closed 2.6 per cent lower at Dh2.23 in Dubai while Aabar shares slipped fell 2.5 per cent in Abu Dhabi. Aabar's offer to acquire the Arabtec stake would be difficult to turn down, Deutsche Bank said in a note on February 4, and cut its price target on Arabtec shares to Dh3 from Dh4.5 to factor in dilution from the deal.
Others were also positive on the deal. "Nomura still thinks this represents a good deal for Arabtec," said Chet Riley, equity research analyst at Nomura International in Dubai.
"The key is how much of that cash injection will go towards receivables repair and how much towards the company's expansion plans and we are not going to get a clearer idea until there is formal communication from the company with regards to the deal."
