(Bloomberg) — Dubai’s largest developer Emaar Properties PJSC plans to buy the rest of its listed construction arm at a valuation of 60 billion dirhams ($16.3 billion), a level that offers investors a small premium to the last close, but is significantly below a pre-war record high.
The firm, led by billionaire Mohamed Alabbar and best known as the developer of the world’s tallest tower, said it will offer 15 dirhams per share for Emaar Development PJSC. That’s above the construction firm’s last close of 13.90 dirhams, but 25% below than a February high.
Valuations for both firms have been weighed down by the regional war, which has tempered demand for real estate in the city. Emaar Properties owns just over 79% of Emaar Development, meaning it would have to pay about 12.6 billion dirhams for the remainder.
Bloomberg News reported Emaar Properties was planning such a deal, and the stock has rallied in recent days. Owning 100% of the group’s main cash generator makes strategic sense for Emaar Properties, giving it greater flexibility to deploy that money across recurring-income assets, international expansion and dividends, analysts at CI Capital wrote in a note on Tuesday.
Emaar Properties had raised about $1.3 billion from the listing of its construction arm in 2017. The deal then ranked among the largest offerings in the United Arab Emirates since Emaar listed its malls business three years earlier.
That unit, Emaar Malls, was eventually delisted at about two-thirds of its original public-offering price after an all-share deal during the Covid-19 pandemic. Months later, fellow billionaire Hussain Sajwani moved to take Damac Properties PJSC private at a nearly 45% discount to its 2015 listing price.
The delistings stoked concerns they would drive investors away from Dubai’s stock market, already struggling to recover from a pandemic-driven selloff.
Emaar’s latest plans come at another difficult moment for Dubai as it grapples with the economic fallout from the Iran war, now in its ninth month. Its shareholding structure also changed in May, when a firm controlled by Dubai’s ruler bought a $6.5 billion stake from the emirate’s main investment vehicle.
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Still, Dubai’s housing market has remained relatively resilient even as the Iran war rattled investors and ended the city’s longest-running property boom. The market posted its second-best first half on record this year, supported by population growth, according to the UAE central bank.
(Updates first three paragraphs with details on discount)
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