Jan. 8 (Bloomberg) -- Aldar Properties PJSC and Sorouh Real Estate Co., Abu Dhabi’s two biggest developers, agreed on merger terms and are expected to announce a deal in about two weeks, according to two people with knowledge of the transaction.
The agreement in principal between the two developers now awaits approvals from a committee monitoring the transaction as well as the United Arab Emirates’ market regulator, said the people, who asked not to be identified because the information is private. The companies, in which the government owns stakes, will merge through an exchange of shares and it’s expected the deal will be completed in about three months, according to one of the people.
Aldar’s Deputy Chief Executive Officer Mohammed Al Mubarak declined to comment when contacted today. A spokesman for Sorouh also declined to comment on the story, which was reported by Reuters earlier today.
Shares of both companies surged. Sorouh gained 14 percent, the biggest jump since Bloomberg started tracking the shares in December 2005, to 1.58 dirhams at the close in Abu Dhabi. Aldar climbed 14 percent, the most since September 2005, to 1.59 dirhams. The ADX Real Estate Index increased 13 percent, the most on record, helping lift the ADX General Index 0.6 percent.
The developers have played an integral part in Abu Dhabi’s drive to turn itself into a tourism and business hub. The companies said in March that they were studying a possible combination with the blessing of the emirate’s government. Abu Dhabi bailed out Aldar in 2011 after house prices in the emirate slumped about 50 percent during the global financial crisis.
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