A. SREENIVASA REDDY (ABU DHABI)
AD Ports Group, an ADX-listed company, could move towards full private ownership after L’IMAD Holding, through its wholly owned subsidiary Abu Dhabi Developmental Holding Company (ADQ), expressed its intention to acquire up to 100% of the company’s shares not already owned by ADQ through a voluntary conditional cash offer.
ADQ currently owns 3.839 billion shares in AD Ports Group, representing approximately 75.42% of the company. It intends to make the offer to all remaining shareholders at Dh6.25 per share in cash. The current ADX data shows 7.3% of shares are owned by Al Seer Marine Equipments and Supplies, which is an Abu Dhabi-listed maritime company and a subsidiary of International Holding Company.
The offer price represents a 23% premium to AD Ports Group’s closing share price of Dh5.10 on August 14, a 25% premium to its one-month volume-weighted average price of Dh5.02 and a 31% premium to its three-month volume-weighted average price of Dh4.76.
It is also 95% above the Dh3.20 subscription price at which AD Ports Group shares were listed on the Abu Dhabi Securities Exchange in February 2022.
L’IMAD Holding recently took full ownership of TAQA through its subsidiary Abu Dhabi Power Corporation, which compulsorily acquired the remaining minority shares after raising its stake to 98.12%, paving the way for TAQA’s delisting from ADX
AD Ports Group said it had received notification of the proposed offer and that the matter would be presented to its board of directors. The company said the required procedures would be followed under the Capital Market Authority’s rules governing acquisitions and mergers of public joint-stock companies.
Explaining the rationale for seeking full ownership, L’IMAD said AD Ports Group plays “a strategic and critical role in supporting the resilience and sustainability of Abu Dhabi’s economy”, requiring continued investment to develop and upgrade its infrastructure.
L’IMAD said it expects AD Ports Group’s growth to be “complex, capital intensive and long-term in nature”, which could require the company to raise equity or increase leverage on its balance sheet.
Such requirements “may not align with the short to medium-term expectations of public market investors”, the announcement said.
L’IMAD also said recently announced transactions and the resulting increase in financial leverage were likely to restrict AD Ports Group’s capacity to distribute dividends to shareholders, potentially limiting short- to medium-term returns.
Against that backdrop, L’IMAD said acquiring the remaining shares would allow AD Ports Group to pursue its long-term strategic objectives more effectively.
“Acquiring the remaining shares in AD Ports will enable the Company to pursue its long-term strategic objectives more effectively, including capital investment programs, strategic acquisitions, and operational transformation initiatives, without the constraints associated with funding requirements or short-term return expectations,” the announcement said.
The offer would also provide existing minority shareholders with what L’IMAD described as a “compelling liquidity opportunity” to monetise their entire investment immediately at a premium to the prevailing market price, without the liquidity constraints, extended timelines or potential market discounts that could arise from selling a large block of shares in the market.
L’IMAD is a sovereign investment platform of the Government of Abu Dhabi and owns ADQ in full. Its Ports & Logistics platform includes AD Ports Group, Etihad Rail and Aramex.
The proposed transaction remains subject to a number of conditions before the offer can become unconditional.
These include obtaining all required governmental, corporate, regulatory and statutory approvals, exemptions or waivers, including final written approval from the Capital Market Authority for the offer document.
AD Ports Group must also provide all information required or requested by the authority in connection with the offer.
The transaction is further conditional on receiving any required antitrust and foreign direct investment approvals from relevant government authorities inside and outside the UAE.
ADQ must satisfactorily complete due diligence on AD Ports Group and obtain any third-party consents identified during that process.
AD Ports Group must also dispatch an offeree circular to shareholders, with no subsequent withdrawal or change in its board’s recommendation that shareholders accept the offer.
Another condition is that no material adverse effect occurs before the offer becomes unconditional, as provided under the applicable Capital Market Authority acquisition and merger rules.
As of the date of the announcement, ADQ had not sought or obtained any irrevocable undertakings from AD Ports Group shareholders committing them to accept the offer.
There were also no arrangements between ADQ and AD Ports Group relating to implementation of the offer, and no termination-fee agreement had been entered into in the event that the transaction does not proceed.
L’IMAD said sufficient financial resources were available to ADQ to pay in full the cash consideration due to AD Ports Group shareholders under the terms of the offer.
Rothschild & Co Middle East is acting as financial adviser to the offer, while Emirates NBD Capital and First Abu Dhabi Bank are joint lead managers. EFG Hermes UAE is co-lead manager, Emirates NBD and FAB are joint lead receiving banks, and Allen Overy Shearman Sterling is legal adviser.
AD Ports Group said it would make further announcements on any material developments relating to the proposed offer.