Dubai: A Qatari company is considering buying Dubai jewellery giant Damas, a little over a week after the founders of the firm announced plans to sell part of their stake.

Qatari Mannai, which has business arms spanning a number of fields, including oil and gas, automotives, consumer products and travel services, confirmed yesterday that it is mulling "the possibility of making a cash offer for Damas, which may be made in conjunction with one or more other investors."

"There can be no guarantee that any offer will ultimately be made for Damas nor as to the terms on which any offer might be made," the company added in a statement.

Mannai revealed that it had secured commitments representing 58.79 per cent of Damas shares, and that shareholders, including Tawhid Abdullah, Tawfique Abdullah and Tamjid Abdullah, the brothers that founded the Dubai-based retailer, were willing to accept the offer if it was made for $0.45 per share. The price is conditional on a firm offer being made to Damas prior to April 30. "These commitments remain binding on the relevant shareholders even if a third party announces a firm intention to make an offer for Damas at a price above $0.45 per Damas share," the company said.

Background

Damas was fined Dh2.57 million in 2010 by the Dubai Financial Services Authority and its board was asked to resign after an inquiry found the Abdullah brothers withdrew funds without board approval and owed the company Dh614 million.

The withdrawals triggered a liquidity crunch at the company and a default on loan repayments, which pushed it to negotiate debt restructuring. The company reached an agreement with a bank steering committee last year, which involved extending the maturities on about Dh3 billion of loans. Damas said on November 27 that six-month profit attributable to shareholders rose to Dh24.7 million from Dh992,000 a year earlier.

Damas shares soared 133 per cent the past month to 35 cents yesterday, the highest since October 2009. An offer of 45 cents a share will value the company at $445 million.

  • 58.79%: Damas shares have committed to the deal
  • $0.45: price shareholders willing to accept per share
  • Dh2.57m: fine imposed on Damas by regulator in 2010

— With inputs from agencies