Arabtec Shares Advance in Dubai After Aabar Boosts Stake

Aabar Investments PJSC became Arabtec Holding Co.’s biggest shareholder after paying 3.54 billion dirhams ($962 million) to increase its stake in the construction company to about 35 percent. Shares in the builder declined.

Aabar, a government-backed investor based in Abu Dhabi, bought the stake in the United Arab Emirates largest contractor from Hasan Ismaik, the company’s former chief executive officer, according to a statement posted yesterday on the Dubai exchange’s website. Aabar raised its stake to 34.93 percent. Bloomberg reported earlier that a deal had been struck.

Arabtec rose as much as 3.8 percent today before closing 0.2 percent lower at 4.25 dirhams. It was the most traded stock on Dubai’s DFM General Index, with 136 million shares changing hands.

The transaction between Arabtec’s two largest shareholders concludes months of speculation that have roiled the company’s shares as well as the wider Dubai stock market. Ismaik’s resignation in June and the subsequent dismissal of top managers threw into doubt an expansion plan that saw Arabtec shares quadruple in value during his 15 months in charge.

“Speculation about Aabar’s commitment to Arabtec have been a key overhang on the stock and the market as a whole,” Taher Safieddine, an analyst at Shuaa Capital PSC in Dubai, said by phone yesterday. “Now the focus can turn back to the fundamentals, from streamlining operations to new growth options.”

Arabtec’s shares tumbled in early June amid speculation that Aabar was selling shares and withdrawing its support of the company. The stock lost more than 50 percent of its value between June 5 and June 24, while Dubai’s benchmark index dropped more than 20 percent.

Confidence Vote

“Increasing Aabar’s ownership is evidence of its confidence in the future of Arabtec and its attractiveness as an investment opportunity,” Khadem Al Qubaisi, who serves as chairman for both Aabar and Arabtec, said in a separate statement yesterday.

Aabar bought 707 million shares for 5 dirhams each in a special trade, according to a stock market statement.

Before the deal, Ismaik owned 27.9 percent of Arabtec, while Aabar held 18.9 percent of the stock, data compiled by Bloomberg show. An assistant for Ismaik didn’t answer calls seeking comment yesterday.

Arabtec still needs to clarify questions about the status of its Egyptian housing project, a venture with Samsung Engineering Co. and agreements on development projects with Aabar, said Safieddine, who has the stock under review.

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