UAE developers Aldar, Sorouh eye state-backed merger
By Praveen Menon
DUBAI (Reuters) - Abu Dhabi's struggling developer Aldar Properties may merge with local rival Sorouh Real Estate SOR.AD in a state-backed tie-up that could create a company worth some $15 billion in assets.
A decision on the merger of the top two developers in the emirate will be made within three months after a joint committee assesses the matter, the companies said in a joint statement on the Abu Dhabi bourse, adding the talks had "the blessing of the Abu Dhabi government".
The plan comes as prices slide in the emirate's real estate sector, which has not recovered from the downturn seen after the 2008 global financial crisis. Property firms have been forced to cancel projects and restructure their huge pile of debt.
Aldar, in which Abu Dhabi state fund Mubadala MUDEV.UL has a 49 percent stake, has relied heavily on the government over the past 18 months.
The builder of the Yas Marina Formula One motor racing circuit has assets worth more than 40 billion dirhams ($10.9 billion) and finally swung to profit in 2011, lifted by two government bailouts totalling nearly $10 billion.
Smaller Sorouh, which has assets of 14.1 billion dirhams, has fared better than its bigger rival, supported by a focus on existing project completion and delivery.
"We'll do it if it's good for both companies," Sorouh Managing Director Abu Bakr Seddiqi Al Khoury said at the developer's annual general meeting in Abu Dhabi. "It won't change or shift our strategy from what we are doing today."
Aldar's Deputy Chief Executive Mohammed Khalifa Al Mubarak also said there is no concrete decision yet and the way forward would only be clear after assessment by the committee. Continued...