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State-owned holding company ADQ’s Senaat will combine its wholly-owned subsidiary Emirates Steel Industries with Arkan, a construction and building materials company in the UAE, according to a bourse filing on Sunday.
In a statement to the Abu Dhabi Securities Exchange (ADX), Arkan said its board of directors has received an offer to merge the two firms in exchange for the issuance of an instrument that would automatically convert into approximately 5.1 billion ordinary shares in Arkan’s capital.
Senaat would then own the majority (87.5 percent) of the combined entity’s share capital.
“The key terms of Senaat’s offer are to transfer Emirates Steel to Arkan in consideration of the issuance by Arkan to Senaat of a convertible instrument,” said Arkan, whose portfolio companies include Al Ain Cement Factory, Emirates Blocks Factories and Arkan Dry Mortar.
“When applied to Senaat’s valuation of Emirates Steel, the offer implied an equity value for Arkan of approximately 1.4 billion dirhams ($381 million). Post completion, Senaat would own approximately 87.5 percent of the entire issued share capital of the combined group,” it added.
Senaat is an industrial conglomerate that manages billions of dirhams in assets, operating in various industries, including metals, oil, construction and food and beverage manufacturing.
Arkan said the board will review the offer before making any recommendation to the shareholders.
“Should an agreement be reached between the two parties, an Arkan general assembly meeting would consider approving the transaction during [the second half of 2021],” Arkan said.
“At this time, there is no certainty that any transaction will occur. The offer is subject to receipt of all relevant governmental approvals including regulatory approvals by the Securities and Commodities Authority (SCA), as well as shareholder approvals.”
(Writing by Cleofe Maceda; editing by Seban Scaria)
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