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Do you think Emaar’s merger with Dubai Holding, Sama Dubai and Tatweer is a good idea?
The results are in.
July 5, 2009 10:30 by Dana El Baltaji
Emaar Properties, the developer behind Burj Dubai and Emirates Hills, will merge with three Dubai government-owned developers – Dubai Properties, Sama Dubai and Tatweer – resulting in a conglomerate that carries only AED13.4 billion ($3.65 billion) of debt.
The merger will take approximately four months to complete.
“Consolidating these three companies with Emaar is a natural progression in the evolution of the Dubai real estate landscape, providing benefits to all stakeholders,” Mohammed Al Gergawi, chairman of Dubai Holding, said in a joint statement with Emaar.
“Emaar and Dubai Holding […] with the assistance of their financial advisers, the Royal Bank of Scotland PLC and Merrill Lynch International respectively, are in the process of finalizing a thorough assessment of the merits of this proposed consolidation,” the statement said.
As soon as the merger was announced, the developer’s shares dropped 10 percent on the Dubai Financial Market, its biggest drop since November 2008.
Most of Kipp’s pollsters, however, couldn’t care less about the merger. Approximately 55 percent of respondents said they “don’t care” about the news. Meanwhile, 22 percent said the merger “will boost confidence in the property market,” and 14 percent said it “is the way forward for many developers in the emirate.”
Indeed, analysts predicted at the beginning of 2009 that if numerous Dubai-based companies wish to stay afloat after the financial crisis, they will have to consider merging with other corporations.
For some respondents, however, the conglomerate will become exceedingly large; 9 percent said that the “new entity will be too big to handle.”
We’ll have to wait until 2010 to see how it handles itself.