The US$1.7 billion (Dh6.24bn) acquisition of Arabtec Holding by Aabar Investments has hit another obstacle as both sides have agreed to extend the deadline to complete due diligence by another month. "The fact that they are extending the due diligence makes me suspect that they are finding there are more impairments to the receivables than what the market originally factored in," said Chet Riley, an analyst at Nomura Securities in Dubai.
Aabar, the Abu Dhabi-owned investment company, said in January that it would buy a stake of 70 per cent in the country's largest construction firm at Dh2.30 per share by using a convertible bond. Analysts said the extension of due diligence may signal that Aabar was waiting to see how Arabtec's business had fared since the deal was announced on January 8. The company's stock price has declined from Dh2.89 on the day of the announcement to Dh2.17 yesterday, meaning Aabar's purchase price of Dh2.30 per share would be at a premium to the market price. Arabtec is set to report its earnings this week, which are expected to provide a more detailed picture of the company's exposure to Dubai's faltering property market.
Once the earnings come out "we will get a much clearer sense of what the provisions actually are", Mr Riley said. Arabtec's fortunes are intimately tied to the Gulf's property sector, which has suffered lately as prices declined and investors retreated in the wake of the global economic uncertainty. Property prices in Dubai are estimated to have fallen by as much as half last year, and by almost that much in Abu Dhabi.
Arabtec said last week it had stopped work on one of the largest housing projects of the Dubai World-owned developer Nakheel because it had not been paid for its services. As a slowdown in Arabtec's business grows more evident, Mr Riley said Aabar could be contemplating reducing the cost of its acquisition, or the "strike price" of the convertible bond. "My view is that as part of the due diligence process, they will lower the strike price further," he said. "Aabar will come back with a revised price. If you're Aabar, why would you buy something at Dh2.30 when it's trading at Dh2.17?"
The deadline for due diligence - a standard process in which a company evaluates the financial health of another firm it is acquiring - had initially been set at the middle of last month, roughly a month after the announcement of the deal. It was then extended to the middle of this month and yesterday Aabar was given an additional month to conduct its review. On Thursday, Riad Kamal, the chief executive of Arabtec, said the deal was progressing.
A deal would still need the backing of 75 per cent of Arabtec's shareholders and approval from government regulators before going through. Shareholders are to vote on it at an extraordinary general meeting following the completion of due diligence. While the deal will give Arabtec much-needed cash to tide it through the economic downturn, analysts have said it would also seriously dilute the value of existing shareholders' stakes. That factor has prompted some scepticism about the deal, and last month Deutsche Bank cut its price target for Arabtec shares to Dh3 from Dh4.50.
The deal has also been plagued from early on by rumours about insider dealing after trading volumes in Arabtec shares spiked in December, a charge that Aabar denied days after the deal's announcement. "I should hope that whatever the board of Arabtec sees as beneficial, that the shareholders will also see as beneficial," said Mr Kamal. The extension of due diligence will allow the deal to move forward on a "clean slate", said Mala Pancholia, an equity research analyst at Al Mal Capital, the investment bank.
"In our view, that's a good way to move forward; it gives Aabar the chance to be able to change aspects of the deal if they want to - meanwhile, Arabtec gets the chance to clean its balance sheet before the deal moves forward." Meanwhile, Mr Kamal said Arabtec has stopped work on one of Nakheel's largest housing projects because it had not been paid by the Dubai World-owned developer. The company had been building Al Furjan, a development that was originally planned to include 4,000 homes, until the beginning of this year. It won the $816 million contract for the first 1,500 homes in June 2008, but completed only 550.
Mr Kamal said no payments had come through from the developer since December's $10bn cash injection from Abu Dhabi. * additional reporting by Angela Giuffrida bhope@thenational.ae afitch@thenational.ae
WWE TLC results
Asuka won the SmackDown Women's title in a TLC triple threat with Becky Lynch and Charlotte Flair
Dean Ambrose won the Intercontinental title against Seth Rollins
Daniel Bryan retained the WWE World Heavyweight Championship against AJ Styles
Ronda Rousey retained the Raw Women's Championship against Nia Jax
Rey Mysterio beat Randy Orton in a chairs match
Finn Balor defeated Drew McIntyre
Natalya beat Ruby Riott in a tables match
Braun Strowman beat Baron Corbin in a TLC match
Sheamus and Cesaro retained the SmackDown Tag Titles against The Usos and New Day
R-Truth and Carmella won the Mixed Match Challenge by beating Jinder Mahal and Alicia Fox
ENGLAND%20SQUAD
%3Cp%3EFor%20Euro%202024%20qualifers%20away%20to%20Malta%20on%20June%2016%20and%20at%20home%20to%20North%20Macedonia%20on%20June%2019%3A%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EGoalkeepers%3C%2Fstrong%3E%20Johnstone%2C%20Pickford%2C%20Ramsdale.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EDefenders%3C%2Fstrong%3E%20Alexander-Arnold%2C%20Dunk%2C%20Guehi%2C%20Maguire%2C%20%20Mings%2C%20Shaw%2C%20Stones%2C%20Trippier%2C%20Walker.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EMidfielders%3C%2Fstrong%3E%20Bellingham%2C%20Eze%2C%20Gallagher%2C%20Henderson%2C%20%20Maddison%2C%20Phillips%2C%20Rice.%0D%3Cbr%3E%0D%3Cbr%3E%3Cstrong%3EForwards%20%3C%2Fstrong%3EFoden%2C%20Grealish%2C%20Kane%2C%20Rashford%2C%20Saka%2C%20Wilson.%3C%2Fp%3E%0A
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
- not have been convicted of offences or crimes involving moral turpitude
- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
How green is the expo nursery?
Some 400,000 shrubs and 13,000 trees in the on-site nursery
An additional 450,000 shrubs and 4,000 trees to be delivered in the months leading up to the expo
Ghaf, date palm, acacia arabica, acacia tortilis, vitex or sage, techoma and the salvadora are just some heat tolerant native plants in the nursery
Approximately 340 species of shrubs and trees selected for diverse landscape
The nursery team works exclusively with organic fertilisers and pesticides
All shrubs and trees supplied by Dubai Municipality
Most sourced from farms, nurseries across the country
Plants and trees are re-potted when they arrive at nursery to give them room to grow
Some mature trees are in open areas or planted within the expo site
Green waste is recycled as compost
Treated sewage effluent supplied by Dubai Municipality is used to meet the majority of the nursery’s irrigation needs
Construction workforce peaked at 40,000 workers
About 65,000 people have signed up to volunteer
Main themes of expo is ‘Connecting Minds, Creating the Future’ and three subthemes of opportunity, mobility and sustainability.
Expo 2020 Dubai to open in October 2020 and run for six months
Bombshell
Director: Jay Roach
Stars: Nicole Kidman, Charlize Theron, Margot Robbie
Four out of five stars
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
FIRST TEST SCORES
England 458
South Africa 361 & 119 (36.4 overs)
England won by 211 runs and lead series 1-0
Player of the match: Moeen Ali (England)
At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
Duterte Harry: Fire and Fury in the Philippines
Jonathan Miller, Scribe Publications
The specs: 2018 Harley-Davidson Fat Boy
Price, base / as tested Dh97,600
Engine 1,745cc Milwaukee-Eight v-twin engine
Transmission Six-speed gearbox
Power 78hp @ 5,250rpm
Torque 145Nm @ 3,000rpm
Fuel economy, combined 5.0L / 100km (estimate)
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Mia Man’s tips for fermentation
- Start with a simple recipe such as yogurt or sauerkraut
- Keep your hands and kitchen tools clean. Sanitize knives, cutting boards, tongs and storage jars with boiling water before you start.
- Mold is bad: the colour pink is a sign of mold. If yogurt turns pink as it ferments, you need to discard it and start again. For kraut, if you remove the top leaves and see any sign of mold, you should discard the batch.
- Always use clean, closed, airtight lids and containers such as mason jars when fermenting yogurt and kraut. Keep the lid closed to prevent insects and contaminants from getting in.