Arabtec to buy rest of Target Engineering
Dubai, March 11, 2013
Dubai-based builder Arabtec will buy the 40-percent stake in Target Engineering it does not already own to expand its move into the oil and gas construction business, two sources with knowledge of the deal said.
Arabtec underwent a management shake-up last month, driven by its biggest shareholder Abu Dhabi investment fund Aabar, which saw its chief executive replaced.
Arabtec, which bought a 60-percent stake of Target in 2007, is expected to announce the deal in coming days. No valuation was immediately available.
Arabtec declined to comment.
Target Engineering specialises in oil and gas and marine projects with operations in the United Arab Emirates, Qatar and Saudi Arabia. The unlisted firm's turnover was $387 million last year, according to its website.
Target's current work in hand, as of end 2012, was $310 million, with turnover for 2013 estimated to be around $477 million, the website stated.
"This makes perfect sense for Arabtec considering their plans to grow the oil and gas business. Target is well experienced in such projects and their work is growing," said an analyst who did not wish to be identified.
Arabtec said last month it would rely on the reputation of its biggest shareholder and proceeds from a planned $1.8 billion capital raising to expand its business. Aabar owns stakes in companies such as commodities trader Glencore and Italian bank UniCredit.
Cario-based EFG-Hermes said in a Feb. 28 note that Arabtec might use funds from the capital hike to take over Dubai interiors contracting firm Depa, in which it has a 23.4 percent stake.
One source close to the company said the Target acquisition would be one of the first key steps made by the new management. Aabar has been exerting its influence since it started buying shares in the company last year.
It replaced four Arabtec board members with its own candidates and named its chairman, Kadem Abdulla al-Qubaisi, as Arabtec's chairman. - Reuters