UAE’s largest industrial investment holding company General Holding Corporation (Senaat) has submitted an offer to merge its wholly-owned subsidiary Emirates Steel with Arkan Building Materials Company to develop an industrial group with assets of $3.54 billion (Dh13 billion).
According to the statement, the combined group will compete alongside global industry leaders and will have a compelling strategic proposition with significant growth potential in the UAE and globally.
The combined group will also play an important role in delivering the UAE’s Industrial Strategy “Operation 300bn” through the production and distribution of market-leading products, ensuring that local industries are a driving force of a sustainable national economy.
Under key terms of the offer, Senaat would transfer Emirates Steel to Arkan for a convertible instrument that would automatically convert into approximately 5.1 billion ordinary Arkan shares upon completion of the deal.
The conversion price for the convertible instrument into Arkan shares is $0.22 (AED 0.798) per share. The offer implies an equity value of approximately $381 million (AED 1.4 billion) for Arkan. Senaat would own approximately 87.5 percent of the combined group’s total issued share capital after the transaction is completed.
“We believe the combination of Emirates Steel and Arkan presents an excellent opportunity for Arkan’s shareholders, offering increased scale, financial strength, resilience, and value via a best-in-class player with international ambitions. Emirates Steel has invested ahead of the market in upgrading and futureproofing its operations, introducing the latest innovative technologies into its manufacturing processes, and establishing a leading position in ESG. The proposed combination will create value for stakeholders in the UAE and beyond, offering an entry point for investors into one of the region’s most important sectors.”
If Arkan’s Board of Directors recommends the offer and its shareholders approve it, the transaction could close in the second half of 2021, subject to all necessary governmental and regulatory approvals, as per the statement. Rothschild & Co are acting as financial advisor and Allen & Overy LLP are acting as legal advisor to Senaat and its shareholder.