Aabar offer for Arabtec 'tough to reject'
Dubai, February 4, 2010
Aabar Investments' offer to acquire a 70 per cent stake in Arabtec Holding would be difficult to turn down, Deutsche Bank said, and cut its price target on shares of Arabtec to factor in dilution from the deal.
'Refusing an Abu Dhabi government entity as a main shareholder could jeopardise Arabtec's position in the emirate or reduce the likelihood of seeing the Dubai receivables getting repaid,' the brokerage said in a note to clients.
Last month, Arabtec said Aabar would acquire a 70 per cent stake in Arabtec for $1.7 billion. Shares of Arabtec have been pressured by sustained speculation that the deal will not go through. The stock was down 0.44 per cent at 2.28 dirhams by 0845 GMT.
Earlier, Arabtec's chief executive Riad Kamal was quoted as saying that the company's merger with Aabar would go ahead and there was no truth to speculation that the deal was off.
Deutsche Bank cut its price target on shares of Arabtec to 3 dirhams from 4.50 dirhams, but maintained its 'buy' rating on UAE's biggest contractor by market value.
'It all comes down to accepting significant dilution in exchange for a deal securing the balance sheet and providing a sustainable platform for expansion,' the brokerage said.-Reuters