Abu Dhabi General Holding Corp (Senaat) is seeking the merger of Arkan (ARKAN.AD) and Emirates Steel to create the largest steel and building materials company in the UAE.
Senaat, backed by state-owned Abu Dhabi-owned ADQ, currently owns 51% of Arkan and all unlisted Emirates Steel.
Arkan will issue a convertible instrument to Senaat under the proposed merger agreement that would automatically be converted into approximately 5.1 billion common shares of the company’s capital at 0.798 dirhams per share, Senaat said in a statement.
That would mean a valuation of 1.4 billion dirhams ($ 381 million) for Arkan.
Once the transaction is completed, Senaat would own approximately 87.5% of the total issued share capital of the combined group.
The proposed merged entity would have total assets worth 13 billion dirhams ($ 3.54 million), he said.
The agreement is another sign of consolidation among companies backed by ADQ.
ADQ owns the ports of Abu Dhabi, Abu Dhabi Airport and the stock exchange operator ADX. It has also amassed a portfolio of agri-food companies and last year bought a 45% stake in commodity trader Louis Dreyfus Co.
Rothschild & Co acts as financial advisor and Allen & Overy LLP as legal advisor to Senaat and its shareholder ADQ for the proposed Arkan-Emirates Steel merger.
(1 $ = 3,6728 United Arab Emirates dirhams)
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