Dubai-based multinational real estate development company Emaar Properties and its shopping malls unit, Emaar Malls, have received final regulatory approval from the Securities and Commodities Authority (SCA) to the proposed merger of the two companies.
The proposed merger has the solid support and recommendation of the board of directors of Emaar Properties and Emaar Malls to strengthen the company’s position as one of the leading integrated and diversified real estate players in the Middle East and North Africa (MENA) region, the companies said in a joint statement.
According to the companies statement, “the merger will ensure both Emaar Properties and Emaar Malls are strategically positioned to capture opportunities in the marketplace and drive shareholder value.”
The transaction, subject to satisfying the required conditions, would be affected as a statutory merger with Emaar Malls’ shareholders (excluding Emaar Properties) receiving 0.51 Emaar Properties shares for every Emaar Malls share held.
This represents a premium of 7.1 percent of $0.46 per share, the closing price of Emaar Malls’ share on March 1, the last trading day prior to the merger announcement. It is also a premium of 3.5 percent on the closing price of Emaar Malls’ $0.57 per share on September 1 and a “premium of 4.4 percent to the market-implied exchange ratio based on volume-weighted average prices over the last one month to September 1,” the companies said.
According to the companies statement, the merger still needs the approval of 75 percent of shareholders in each company. The two sets of shareholders are expected to vote on the deal in their separate general assemblies on October 10.
Once the deal is closed, the assets and liabilities of Emaar Malls, including the rights and liabilities of Emaar Malls’ $750 million Sukuk due in 2024, will be assumed by Emaar Properties. The transaction is expected to be completed by the end of this year, the company said.
The existing business of Emaar Malls will also be “reconstituted in a wholly-owned subsidiary” of Emaar Properties, the companies said. Earlier this year, Emaar said that its malls unit will continue to develop the portfolio of retail assets, while Emaar Properties will remain listed on the Dubai Financial Market (DFM) after the merger.
Emaar Malls, which owns and operates assets including The Dubai Mall and Dubai Marina Mall, swung to a profit in the second quarter of this year after posting a loss in the same period a year ago, as the emirate’s retail sector continued to recover from the pandemic. Emaar Malls plans to open its Dubai Hills Mall in the first quarter of 2022, which will have up to 600 outlets and a gross leasable area of 2 million square feet.