Emaar Properties and Emaar Malls have announced a plan to merge the two units to become MENA’s largest integrated and diversified real estate company.
As part of the transaction, the existing business of Emaar Malls will be reconstituted in a wholly owned subsidiary of Emaar Properties and will continue to develop and hold a portfolio of premium shopping malls and retail assets, and Emaar Properties will continue to be listed on the Dubai Financial Market.
The proposed transaction would be effected as a statutory merger and by way of a share swap, with Emaar Malls shareholders (excluding Emaar Properties) receiving 0.51 Emaar Properties shares for every one Emaar Malls share.
This represents a premium of 7.1% to the closing price of Emaar Malls on 1 March 2021, the last trading day prior to this announcement, and a premium of 11.2% to the market implied exchange ratio based on volume weighted average prices over the last one month to 1 March 2021.
The merger is subject to a number of conditions, including the approval by the shareholders of Emaar Properties and Emaar Malls
The combination offers a compelling value proposition for both Emaar Properties and Emaar Malls’ shareholders and is expected to boost Emaar Properties’ financial and operational performance through full (100%) consolidation of Emaar Malls’ earnings and cash flow generation, and further reduce volatility through an increase in the proportion of earnings from recurring businesses
The merger would create a significantly larger and more diversified group, while reconstituting Emaar Malls as a wholly owned subsidiary that will continue to develop and hold a portfolio of premium shopping malls and retail assets, with the majority of its EBITDA being generated within the Emirate of Dubai.
It will safeguard Emaar Malls’ credit strength with a neutral impact expected to its existing credit ratings by virtue of the transaction and streamline Emaar Properties’ organizational structure and increase the combined group’s overall resiliency and strategic alignment across its key entities.
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