ABU DHABI: The boards of Aldar Properties and Sorouh Real Estate, Abu Dhabi's biggest real estate developers, have approved a state-backed merger of the firms through a share swap, sources familiar with the matter said yesterday.
"The boards have put an official seal on it and will soon be calling an extraordinary general meeting of shareholders for approval," one of the sources said.
The sources declined to be named because the matter has not yet been made public. Company spokesmen declined to comment or could not be reached to comment.
The sources said they could not confirm the ratio of Aldar shares to be swapped for Sorouh shares, but that an announcement of the terms could come as soon as today.
"The next step is to seek shareholder approval but it's pretty much a done deal now. If you look at shareholders on either side, most of the big ones are in approval of the deal," said a second source.
The two companies have combined assets worth nearly $15 billion and a combined market capitalisation of around 10 billion dirhams ($2.7 billion), which would make the proposed merger one of the biggest 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 over 50 per cent of their value. The merger could help to stabilise the real estate market by ensuring better coordination of new property developments.