Aabar Said to Be in Talks for 50% of Ex-CEO Arabtec Stake

Arabtec Holding Co.’s second-largest shareholder is in talks to buy at least half of a 28.9 percent stake held by the construction company’s former chief executive officer, a person with knowledge of the situation said.

Aabar Investments PJSC is looking to raise its holding in Arabtec to more than 30 percent, making it the company’s largest shareholder, said the person, who asked not to be identified because the discussions are private. The 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. At the top end of that range, half of former-CEO Hasan Ismaik’s 1.27 billion shares would be worth about $1.03 billion.

An Aabar deal would ease concerns that the stake would be sold on the open market “potentially driving the share price down,” Nayal Khan, head of institutional sales and trading at the Naeem Holding brokerage in Dubai, said by phone. It would also “remove concerns that a large chunk of the company is owned by an outsider,” he said.

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, which fell 23 percent in that period.

A public relations representative for Aabar declined to comment, citing company policy. A personal assistant for Ismaik also declined to comment. Aabar holds 18.9 percent of Arabtec, according to data on the website of Dubai’s bourse.

Arabtec rose 1.9 percent in Dubai trading to close at 4.95 dirhams. The stock has gained 90 percent this month.

Before it's here, it's on the Bloomberg Terminal.