Arabtec denies merger talks with Kuwait, Saudi firms
Dubai, August 21, 2013
Dubai-based Arabtec Holding, a leading Mena construction company, today clarified that it is not in any merger talks with two leading construction companies in Kuwait and Saudi Arabia.
A statement from the company said that it noted the recent media speculation regarding the potential mergers with Kuwait’s Combined Group Contracting Co. and Saudi Arabia’s Saudi Oger Ltd.
"The company would like to state that there are no discussions to merge with either of the two companies and there are no current plans to do so. The company continues to review opportunities in Saudi Arabia and Kuwait and will disclose any developments in line with the regulations of the Dubai Financial Market," the statement said.
Reuters earlier quoted the irm's chief executive as saying it is considering a merger with the largest contractors in Saudi Arabia and Kuwait to create a pan-Gulf construction firm.
Arabtec, which raised $653 million from a rights issue in July, is embarking on an ambitious expansion plan under chief executive Hasan Abdullah Ismaik who was appointed after Abu Dhabi state fund Aabar bought a 22 percent stake last year.
"We are now looking for a merger with two of the biggest construction companies in the Gulf, one in Saudi Arabia and the other in Kuwait," Ismaik told CNBC's Arabic news channel in an interview, without naming either of the companies.
Kuwaiti newspaper Al-Qabas, citing unnamed sources, reported that Arabtec was in talks with Kuwait's Combined Group Contracting Co (CGCC) and Saudi Arabia's Saudi Oger. But CGCC denied the report.
"We are not related to this issue at all. We did not approach anyone and no one from Arabtec offered anything. There is not even an intention in this regard," an executive at the CGCC, declining to be named, told Reuters.
Saudi Oger officials could not be reached for comment.
Saudi Oger, owned by the family of late Lebanese prime minister Rafik Al-Hariri, is one of the largest construction firms in the kingdom. The company also has interests in telecommunications through its indirect stake in Turk Telekom .
Arabtec, which wants to expand its business in Saudi Arabia, has worked closely with Oger on several contracts in the kingdom and outside. A consortium which includes Arabtec and Oger won a $653 million contract to build the Louvre museum in Abu Dhabi.
One Dubai-based banking source said a deal to create a regional construction firm might not be easy because of differences in real estate regulations and the politics involved in a cross-border deal.
"It's a good idea and this region does need to consolidate a lot of its businesses across sectors but it is going to be a very difficult one to get through the line," the banker said speaking on condition of anonymity due to sensitivity of the matter.
"We are not aware of any bankers being involved in these discussions and it does look very preliminary if at all any talks are happening."
Arabtec shares ended 3.9 percent higher on the Dubai bourse on Wednesday. Shares in CGCC were unchanged in Kuwait. - TradeArabia News Service and Reuters
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