Dubai-based Arabtec Holdings is considering a merger with the largest contractors in Saudi Arabia and Kuwait to create a pan-Gulf construction firm, the firm’s chief executive said.
Arabtec, which raised $653 million from an equity rights issue in July, is expanding under chief executive Hasan Abdullah Ismaik, who was appointed after Abu Dhabi state fund Aabar bought a 22 percent stake in it last year.
“We are now looking for a merger with two of the biggest construction companies in the Gulf, one in Saudi Arabia and the other in Kuwait,” Ismaik told CNBC’s Arabic news channel in an interview, without naming either of the companies.
Kuwaiti newspaper Al-Qabas, citing unnamed sources, reported that Arabtec was in talks with Kuwait’s Combined Group Contracting Co (CGCC) (CGCK.KW) and Saudi Arabia’s Saudi Oger.
But in a brief statement issued later, Arabtec said “there are no discussions to merge with either of the two companies and there are no current plans to do so.”
It added that it was continuing to “review opportunities in Saudi Arabia and Kuwait” and would disclose any developments in line with Dubai stock exchange rules.
CGCC also denied the newspaper report, saying there had been no contact with Arabtec on the issue and it had no intention of merging with the Dubai firm. Saudi Oger officials could not be reached for comment.
Arabtec, which wants to expand its business in Saudi Arabia, has worked closely with Oger on several contracts in the kingdom and outside. A consortium which includes Arabtec and Oger won a $653 million contract to build the Louvre museum in Abu Dhabi.
One Dubai-based banking source said a deal to create a regional construction firm might not be easy because of differences in real estate regulations and the politics involved in a cross-border deal.
“It’s a good idea and this region does need to consolidate a lot of its businesses across sectors but it is going to be a very difficult one to get through the line,” the banker said speaking on condition of anonymity due to sensitivity of the matter.
“We are not aware of any bankers being involved in these discussions and it does look very preliminary if at all any talks are happening.”
Arabtec shares ended 3.9 percent higher on the Dubai bourse on Wednesday. Shares in CGCC were unchanged in Kuwait.
Source: Reuters
