Merger green light for Emaar Properties and Emaar Malls

Emaar Properties and Emaar Malls on Tuesday announced their intention to merge their operations to capture opportunities in the marketplace and drive shareholder value.

In a statement, the Dubai-listed corporate giants jointly announced that each of their boards of directors have voted to recommend an all share merger to their respective shareholders.

As part of the transaction, the existing business of Emaar Malls will be reconstituted in a wholly-owned subsidiary of Emaar Properties and will continue to develop and hold a portfolio of premium shopping malls and retail assets, and Emaar Properties will continue to be listed on the Dubai Financial Market.

“The proposed merger has the unanimous support and recommendation of the board of directors of Emaar Properties and Emaar Malls (acting through its independent directors) and will reinforce Emaar Properties’ position as Mena’s largest integrated and diversified real estate company, ensuring both Emaar Properties and Emaar Malls are strategically positioned to capture opportunities in the marketplace and drive shareholder value,” according to the statement.

The combination of Emaar Properties and Emaar Malls is expected to enhance the combined group’s position as a national real estate champion and will continue to contribute to the ongoing development of Dubai, acting as a critical enabler of the economic vision of Dubai and the UAE.

Vijay Valecha, chief investment officer, Century Financial, said the proposed merger between Emaar Malls and Emaar Properties seems to be in line with the strategy to create prominent national champions.

“Already some large banks have merged as a part of consolidation in the financial sector. The latest merger will help in reducing costs and thereby improve the financial strength of the combined entity,” Valecha told Khaleej Times.

He said Emaar Properties in particular, will benefit as the e-commerce division of Emaar Malls is growing rapidly and accounts for almost one-third of Emaar Malls’ revenue. Moreover, Emaar Mall is expected to see a sharp bounceback in business as normalcy returns.

Statutory merger

The proposed transaction would be effected as a statutory merger and by way of a share swap, with Emaar Malls shareholders (excluding Emaar Properties) receiving 0.51 Emaar Properties shares for every one Emaar Malls share. This represents a premium of 7.1 per cent to the closing price of Emaar Malls on 1 March 2021, the last trading day prior to this announcement, and a premium of 11.2 per cent to the market implied exchange ratio based on volume weighted average prices over the last one month to 1 March 2021.

The merger is subject to a number of conditions, including the approval by the shareholders of Emaar Properties and Emaar Malls.

The combination offers a compelling value proposition for both Emaar Properties and Emaar Malls’ shareholders and is expected to solidify Emaar Properties’ position as Mena’s largest integrated and diversified real estate company. The proposed merger will boost Emaar Properties’ financial and operational performance through full (100 per cent) consolidation of Emaar Malls’ earnings and cash flow generation, and further reduce volatility through an increase in the proportion of earnings from recurring businesses.

Emaar Malls closed slightly down at Dh1.69 on Tuesday while Emaar Properties up by six fils to Dh3.63 in a broader positive market.

— sandhya@khaleejtimes.com

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