Real Estate News

Billion-Dollar Merger of Middle East Real Estate Giants Shoots for October Closing

(DUBAI, U.A.E.) -- The deal is so big and so unprecedented; none of the parties involved knows the estimated value of the transaction at this date.

One thing they do know is that the debt load of the combined entities will be huge - about $3.65 billion, U.S. (13.4 billion dirhams)

Emaar Properties, one of the world's largest commercial real estate companies, wants to merge with three real estate units of Dubai Holdings -- Sama, Tatweer and Dubai Properties.

Dubai Holdings is a 100 percent state-controlled entity, while the government of Dubai owns a 32 percent stake in Emaar.

The parties expect to complete the deal valuation by August 2009.

The Economic Times of Dubai reports the merger is expected to take about four months and could be completed in October 2009, pending the approval of shareholders and regulators.

The entities' total assets will be 194 billion dirhams, Emaar said in a statement to the Dubai Financial Market.

The total debt is about 7 cent of the company's total assets. As of March 2009, Emaar's own external debt obligation was 10 billion dirhams, the newspaper reports. The real estate major had about 68 billion dirhams in book value of assets.

"As for Dubai Holdings, we believe the 126 billion dirhams in assets quoted in the press release consists mostly of land, which could be potentially valued much lower given the current market conditions," according to an Emaar spokesperson.

"We currently have no idea as to what Dubai Holdings' cash position is and what is owed to its contractors and suppliers," the Emaar spokesperson told the Dubai Financial Market.

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