Emaar Properties weighs $3.2 billion buyout of construction, development arm

Dubai: Emaar Properties is considering buying out minority shareholders in its listed subsidiary Emaar Development in a potential multibillion-dollar transaction that could lead to the unit's delisting, Bloomberg reported on Tuesday, citing people familiar with the matter.

Emaar Properties currently owns just over 79% of Emaar Development, which has a market valuation exceeding $15 billion. Acquiring the remaining shares could cost the parent company as much as $3.2 billion at current market prices.

The company could announce plans for a transaction within days, although discussions remain ongoing and no final decision has been reached on the structure or pricing, Bloomberg reported. Emaar could also decide against proceeding.

Representatives for Emaar Properties declined to comment. Shares of Emaar Development rose as much as 11.5% following the report, their biggest intraday gain since early April. The stock remains nearly a third below its level before the Iran war began.

Why Emaar may consider a buyout

Taking full ownership of Emaar Development would give Emaar Properties greater control over cash generated by its residential development business, potentially allowing it to direct more funds towards international expansion, recurring-income assets and shareholder dividends.

Analysts at CI Capital said the transaction could offer strategic benefits, although financing costs and timing would be important considerations.

The potential deal follows Emaar Properties' announcement more than a month ago that it was evaluating proposals aimed at creating shareholder value. The company sought legal and financial advice and is scheduled to review the proposals at a board meeting this week.

JPMorgan analysts previously identified several possible options, including acquiring the remaining stake in Emaar Development, purchasing its residential leasing portfolio under construction, or pursuing mergers, acquisitions and spinoffs within the wider group.

Emaar's previous delisting

Emaar Development was listed in Dubai in 2017, raising approximately $1.3 billion in one of the UAE's largest initial public offerings at the time.

A potential buyout would not be Emaar's first move to consolidate a listed subsidiary. In 2021, Emaar Properties took Emaar Malls private through an all-share transaction, bringing the shopping mall business back under full ownership.

The latest deliberations come amid changes to Emaar's ownership structure. In May, a company controlled by Dubai's ruler acquired a $6.5 billion stake in Emaar Properties from the emirate's main investment vehicle.

The potential transaction also comes as Dubai's property market adjusts to the economic impact of the Iran war. Despite weaker investor sentiment, the emirate recorded its second-strongest first half for housing market activity, supported by population growth, according to the UAE central bank.