Arabtec in merger talks with Abu Dhabi firm; shares jump
Dubai - Arabtec said in a statement that both the companies have commenced a review of the possibility of combining their construction businesses.
Dubai-listed construction firm Arabtec Holding is in merger talks with Abu Dhabi-based construction company Trojan Holding LLC.
Arabtec said in a statement that both the companies have commenced a review of the possibility of combining their construction businesses and are reviewing technical, financial and legal aspects before the merger.
Advisors for the merger have not been assigned and will be notified once appointment is made, the company said in a statement to Dubai Financial Market, where it is listed.
The news lifted Arabtec shares on Tuesday, jumping to a high of Dh1.80 in the morning trade before settling down at Dh1.77, a gain of 11.32 per cent. It was the most-traded share on the Dubai bourse on Tuesday with 26.4 million shares changing hands worth Dh45.5 million.
In May 2019, Arabtec Holding announced that Hamish Tyrwhitt stepped down as Group Chief Executive Officer and Peter Pollard was appointed acting group CEO.
Arabtec Holding reported a 47.2 per cent drop in net profit for the second quarter to Dh26.1 million. Revenue declined to Dh2.19 billion in the quarter, compared with Dh2.39 billion in the same period a year earlier.
Analysts believe that consolidation in the real estate and construction is long-overdue due to stiff competition eating in to the margins of the companies.
KPMG's Global Construction Survey released in August found that the UAE construction sector remains optimistic, with just over half (53 per cent) expecting 6-10 per cent growth next year.
Industry leaders surveyed in the UAE are optimistic about growth prospects, and are confident that technology and governance are likely to play a significant role in the construction sector in the next five years.
Professionals however remain divided over whether companies in the UAE are delivering projects on time and within budget, with time (44 percent) and cost (44 percent) overruns ranking as the top hurdles facing capital construction projects.
"The construction sector is the lifeblood of the UAE economy and it is very encouraging to see that the industry is expecting single to double digit growth this year. As the pace of disruption accelerates, leaders will have to consider implementing a three-pronged approach to rationalize governance and controls, optimize human performance and innovate with technology, to become more future-ready," said Sidharth Mehta, Partner, Head of Building, Construction & Real Estate, KPMG Lower Gulf.