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Arabtec acquires 24% stake in Depa for $65.8m

Contractor pays $65.8m for 24% stake in interiors development company

Image Credit: Pankaj Sharma/Gulf News Archives
A construction site in Dubai. Analysts say the acquisition of a stake in Depa by Arabtec will helpthe contractor to offer a better solution to developers when it bids for projects
Gulf News

Dubai: Arabtec Holding, UAE’s largest contractor, said, it has acquired a 24 per cent stake or 149.55 million shares in Depa Limited, a Dubai-based leading interiors contractor, from investment funds, both the companies said in separate statements.

Depa said, Arabtec has paid $0.44 per share, worth $65.8 million.

“The board of directors of Arabtec Holding PJSC has agreed to acquire a state in Depa Limited, a company listed on Nasdaq Dubai, comprising a total of 147,555,275 shares from various investment funds who offered to sell their shares in Depa Limited,” Arabtec said in a statement posted on Dubai Financial Market where its shares are listed.

Analysts say, the move will help Arabtec to offer a better solution to developers when it bids for projects.

“With this acquisition, Arabtec and Depa could create the right synergy when they engage in projects,” said a Dubai-based analyst, requesting anonymity. “Both are market leaders in their capabilities — which are complimentary as Arabtec constructs projects and Depa develops the interiors. Together, they could provide better and almost complete solutions to developers.”

The move comes just two weeks after Depa secured Dh93 million contract to undertake the supply and installation of interior decoration works for the Hilton Hotel in Abu Dhabi, UAE. The Hotel is the second phase of the Al Forsan International Sports Resorts development, one of the Middle East’s largest sports, leisure and dining resorts.

“The company continues to have a backlog of projects at near record levels and has a very strong pipeline of future projects, especially in the GCC and South East Asia, which will be signed into the backlog in the coming months,” the company said in an earlier statement.

At the end of Thursday’s trading, Arabtec shares declined by 0.85 per cent at Dh2.32, while Depa Limited’s shares trailed by 14.77 to $0.375.

The latest contract adds to the work it is currently doing on the Hilton Hotel in Riyadh, part of the King Saud University, for a contract value of Dh183 million and the new Conrad Hotel in Dubai, Hilton’s luxury brand. The Conrad Hotel contract, which had a value of 
Dh250 million, is due to be completed in the coming months.

“We are seeing an encouraging increase in new business prospects across our core geographies and sectors. Developers have started to bring more projects on stream and our segment of the industry, which typically lags the main contractors, is now starting to recover,” Mohannad Sweid, Chief Executive, said in an earlier statement posted on the Nasdaq Dubai website where its shares are listed.

In the year to date, the Abu Dhabi team has signed Dh450 million of contracts in the hospitality sector. Contracts include the Hilton Hotels in Abu Dhabi and Riyadh, as well as the Dh73 million project for the Regent Emirates Pearl in Abu Dhabi, a mixed-use 47 storey hotel and residential tower; a Dh92 million project for the fit-out of Accommodation Towers in Luanda, Angola and the Ramada Hotel in Doha.

“This together with higher quality projects being signed into the backlog will start to alleviate the squeeze on margins in 2013. We are increasingly well-positioned for future years and this can only help increase shareholder confidence,” he said.

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