Friday, November 09, 2012

Abu Dhabi majors Aldar and Sorouh confirm advanced merger talks

Two major Abu Dhabi developers, namely, Sorouh and Aldar Properties, agreed that the merger talks of the two firms is being supported by the government, and is now at an advanced stage.

The companies are said to have reported higher quarterly profit, despite the impairments and asset write-downs, highlighting glum conditions.

The merger talks of the companies began against the backdrop of continued oversupply, coupled with falling house prices. The prices are expected to fall 5 percent this year in Abu Dhabi.

The companies began merger talks in March 2012. Aldar, the larger company, the developer of the Yas Marina Formula One Circuit, and home to the Abu Dhabi Grand Prix, said that a valuation review had prompted the company to write down Dh.737mn mainly related to hotel assets. Sorouh took a fair value loss of Dh.126.5mn on investments.

Abu Dhabi has spent more than $10bn on Aldar, which equals to the amount required to rescue Dubai from bond default in 2009. In return, land on Al Raha beach, Ferrai World Theme Park and other major assets were sold to the government.

Meanwhile, Aldar posted 43percent growth in third-quarter net profit, touching Dh.206mn, while Sorouh reported a net consolidated profit of Dh.129mn, marking 55 percent growth.

According to the developer, the results were further strengthened by revenue from national housing projects, government-awarded schemes to build homes for UAE nationals, which grew to Dh.607mn from 68 million.

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