Arabtec Shares Suspended as Regulator Demands Answers

Arabtec Holding Co. (ARTC) was suspended from trading today in Dubai as the stock exchange demanded the United Arab Emirates’ biggest construction company respond to a report that the second-biggest investor is in talks to increase it stake.

Aabar Investments PJSC, is in talks to buy at least half of a 28.9 percent stake held by the builder’s former chief executive officer, Bloomberg News reported yesterday, citing a person with knowledge of the matter. Public relations executives for both Aabar and Arabtec declined to comment on the report.

“Before, it was a little bit laissez faire and a company was given time to come up with something the next day,” Sanyalaksna Manibhandu, a senior analyst at NBAD Securities LLC, said by phone today. “This time around, the regulator is saying ‘we’ll suspend while you come up with a response’ and for a company, that’s not very pleasant.”

Chief Executive Officer Hasan Ismaik’s resignation in June and the subsequent dismissal of top managers threw into doubt an expansion plan that saw Arabtec shares quadruple during the CEO’s 15 months in charge. Concerns that the company was losing state support, followed by the CEO’s departure, caused Arabtec to drop by 59 percent in Dubai trading from June 5 to June 30. That dragged down the Dubai Financial Market General Index (DFMGI), which fell 23 percent in that period.

Arabtec rose 1.9 percent to 4.95 dirhams yesterday, extending a 14 percent gain from the day before. Bloomberg reported that Aabar is looking to raise its holding in the company to more than 30 percent, becoming the company’s largest shareholder, according to the person, who asked not to be identified because the discussions are private. Aabar, an Abu Dhabi state-owned investment company, is negotiating a price of 5 dirhams to 6 dirhams a share ($1.36 to $1.63), the person said.

Khadem Al Qubaisi, chairman of both Arabtec and Aabar, said on July 2 that Aabar is considering boosting its stake in Arabtec.

Responding to the report yesterday would have helped the management appear “reasonably transparent and responsive to market news,” Manibhandu said. “But because they waited too long they got suspended the next day.”

To contact the reporter on this story: Zainab Fattah in Dubai at zfattah@bloomberg.net

To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net Ross Larsen

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