Dubai: Abu Dhabi is signing off on another massive merger move – Arkan Building Materials Company will proceed with a “strategic transaction” to acquire the Abu Dhabi-based Emirates Steel Industries. This follows the approval granted by the Board of Directors at Arkan.
Arkan shareholders are now to approve the offer received from General Holding Corporation (or Senaat) on May 9 to acquire Senaat’s wholly-owned subsidiary Emirates Steel. The key terms of Senaat’s offer are to transfer Emirates Steel to Arkan with the issuance by Arkan to Senaat of a convertible instrument.
On closing of the transaction, the convertible instrument would automatically convert into 5.1 billion ordinary shares in Arkan at a fixed price of Dh0.798 a share. Following the conversion, Senaat would own 87.5 per cent of the entire issued share capital of Arkan.
All good to go
Jamal Salem Al Dhaheri, Chairman of Arkan, said: “Arkan is poised to capitalize on emerging opportunities in the construction and building materials sectors, as the world begins to recover from the COVID-19 pandemic. This transaction with Emirates Steel will accelerate our ambitions by combining two sector leaders in the UAE, thereby expanding our product portfolio and order book significantly.
“The deal has substantial value-enhancing potential, and we expect it to be accretive for Arkan’s shareholders. It will strengthen Arkan’s balance-sheet and financial performance, deliver greater international scale, and position Arkan to become an entry point for investing in a key regional sector while playing a key role in the UAE’s Industrial Strategy ‘Operation 300 Billon’.”
What’s the deal about?
The proposed transaction would create a “listed national champion” in the building materials and construction sectors, with “strong potential for growth in the UAE and internationally”.
The combined entity will be positioned to benefit from the post-COVID-19 recovery “anticipated in the UAE’s and the region’s construction sectors, thanks to an expected acceleration in infrastructure projects.”