Construction

Aldar and Sorouh merger likely within a month

Sourouh managing director says that discussions well underway after due diligence began in June

A potential merger agreement between Aldar Properties and Sorouh Real Estate is likely within a month, a senior executive said on Sunday.

Earlier this year, indebted Abu Dhabi developers said that they were in talks for a state-backed merger, which would create a company with $15bn in assets, a Reuter’s news report said.

“We are moving (forward) in the process,” said Sorouh’s managing director, Abu Bakr Seddiqi al Khoury, in an interview with the news agency on the sidelines of a conference.

When pressed for a time schedule for the potential merger, he said that it was likely to be ‘within a month’. In June 2012, the two companies said that due diligence for a merger was underway.

Aldar, which built Abu Dhabi’s Yas Marina Formula One motor racing circuit, has relied heavily on government assistance over the last two years.

Abu Dhabi has reportedly spent more than $10bn on the company; equivalent to the amount it deployed to rescue Dubai from a bond default in 2009.

National Bank of Abu Dhabi is the advisor to the steering committee overseeing the proposed tie up, while Credit Suisse is advising Aldar. Morgan Stanley is working with Sorouh.

The merger of the two local heavyweights comes as Abu Dhabi’s real estate market continues to face difficulties of supply and demand, while property prices in the emirate are expected to fall another 5% by the end of the year.

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