UAE-based Arkan Building Materials Company has won the nod from its shareholders for a strategic merger with Emirates Steel Industries, said local reports on Friday, August 13.
Arkan, a sizeable construction and building materials company, said the deal would create a listed national champion in the building materials and construction sector with a strong potential for growth in the UAE and internationally.
The transaction will close later this year, said the reports. Until then, both companies are expected to continue to operate independently.
Emirates Steel is owned by General Holding Corporation or Senaat, which is a part of ADQ, one of the region’s largest holding companies.
The key terms of the merger were proposed in May this year by Senaat, said the local reports.
The terms are to transfer Emirates Steel to Arkan in consideration for the issuance by Arkan to Senaat of a convertible instrument.
Upon closing the transaction, the convertible instrument would automatically convert into 5.1 billion ordinary shares in Arkan at a fixed price of AED 0.798 (about $0.21) per share.
Following the conversion, Senaat would reportedly own 87.5% of the entire issued share capital of Arkan.
Arkan Chairman Jamal Salem Al Dhaheri was quoted by the reports as saying about the merger: “The transaction will offer investors access to a national and regional champion in the building materials and construction sector, that is well placed for opportunities that emerge from the economic recovery that lies ahead.”