Dubai property developer Emaar offers to buy out construction arm at US$16.3 billion value

DUBAI’S Emaar Properties offered to take over its construction arm in a multibillion-dollar deal at a time when valuations for both firms have been weighed down by the months-long regional war.

The firm plans to offer 15 dirhams per share for Emaar Development, valuing the company at 60 billion dirhams (US$16.3 billion). While that is a premium to the firm’s last close of 13.90 dirhams, it is well below the levels it traded at before the war began.

Emaar Properties owns just over 79 per cent of Emaar Development, meaning it would have to pay about 12.6 billion dirhams for the remainder. Bloomberg News reported the company was planning such a deal on Tuesday, and the stock has rallied in recent days.

Owning 100 per cent of the group’s main cash generator makes strategic sense for Emaar Properties, giving it greater flexibility to deploy that money across recurring-income assets, international expansion and dividends, analysts at CI Capital wrote in a note on Tuesday (Nov 3).

On the other hand, the company would likely weigh considerations including cost of funding a deal and timing, they added.

Led by billionaire Mohamed Alabbar and best known as the developer of the world’s tallest tower, Emaar Properties had raised about US$1.3 billion from the listing of its construction arm in 2017.

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The deal then ranked among the largest offerings in the United Arab Emirates since Emaar listed its malls business three years earlier.

Emaar Malls was eventually delisted at about two-thirds of its original public-offering price after an all-share deal during the Covid-19 pandemic. Months later, fellow billionaire Hussain Sajwani moved to take Damac Properties private at a nearly 45 per cent discount to its 2015 listing price.

The delistings stoked concerns they would drive investors away from Dubai’s stock market, already struggling to recover from a pandemic-driven sell-off.

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Emaar’s latest plans come at another difficult moment for Dubai as it grapples with the economic fallout from the Iran war, now in its ninth month. Its shareholding structure also changed in May, when a firm controlled by Dubai’s ruler bought a US$6.5 billion stake from the emirate’s main investment vehicle.

Still, Dubai’s housing market has remained relatively resilient even as the Iran war rattled investors and ended the city’s longest-running property boom.

The market posted its second-best first half on record this year, supported by population growth, according to the UAE’s central bank. BLOOMBERG