The boards of Aldar Properties and Sorouh Real Estate, Abu Dhabis two largest real estate developers, have approved a state-backed merger of the firms through a share swap
"The boards have officialised it and will soon be calling a meeting of shareholders for approval," a source close to the deal told Reuters. Companies spokesmen, however, declined to comment.
The sources said they could not confirm the ratio of Aldar shares to be swapped for Sorouh shares, but said that an announcement of the terms could come soon.
"The next step is to seek shareholder approval but it is pretty much a done deal now," another source added.
The two companies have combined assets worth close to US$15bn and a combined market capitalisation of nearly US$2.7bn, which would make the proposed merger one of the largest-ever conducted by listed firms in the Middle East.
With the support of the Abu Dhabi government, which owns a major stake in Aldar, managements of the two companies had held discussions for nearly a year on asset valuations, financial terms and the new management structure.
Abu Dhabi residential property prices have been sliding for several years, losing more than 50 per cent of their value. The merger could help to stabilise the real estate market by ensuring better coordination of new property developments.
