Aldar, Sorouh Rally Before EGM Vote on Merger: Abu Dhabi Mover

Sorouh Real Estate Co. surged to the highest level in more than two years and Aldar Properties PJSC rallied before shareholders vote this week on a potential merger between the developers.

Sorouh climbed 6.3 percent to 1.87 dirhams, the highest since June 2010, at the close in Abu Dhabi while Aldar advanced 4.8 percent to 1.54 dirhams, the strongest since Jan. 17. The stocks were the most traded by value on the benchmark ADX General Index, which rose 0.1 percent. The companies will hold separate shareholder meetings on Feb. 21.

Aldar’s board last month approved a plan to offer 1.288 shares for each Sorouh stock in a government-backed acquisition to create the Middle East’s third-largest publicly traded developer. Sorouh’s stock has advanced 15 percent since the announcement as investors deemed the terms of the merger to favor the smaller of the two, while Aldar’s has declined 5.5 percent.

“It seems something very positive is expected at the meeting,” said Nabil Rantisi, managing director of brokerage at Abu Dhabi-based Menacorp. “The expectations seem to be beyond the terms as the movement is strong.”

About 55 million Sorouh shares were traded, more than three times the three-month daily average, compared with 129 million for Aldar, more than six times the average for the same time period.

Abu Dhabi, which bailed out Aldar in 2011, is seeking to revive its property market after prices fell more than 50 percent during a crash in the United Arab Emirates. Sorouh rallied 41 percent in January while Aldar gained 13 percent in the period.

Sorouh’s 50-day volatility, a measure of price swings, advanced to 48 today, while Aldar’s rose to 55, the strongest levels since May. Sorouh’s 2012 net income climbed 32 percent and Aldar said profit more than doubled.

Six analysts recommend investors buy Sorouh while two say hold and two say sell, according to data compiled by Bloomberg. That compares with three holds, four buys and two sells for Aldar.

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