Today's Edition
A. SREENIVASA REDDY (ABU DHABI)
Emaar Properties said it intends to compulsorily acquire all remaining shares in Emaar Development if its combined holding with an indirectly wholly owned subsidiary reaches at least 90% plus one share through its voluntary cash offer.
The offer document, posted by Emaar Development on the Dubai Financial Market (DFM) website, sets out a cash offer of Dh15 per share for the shares not already held by Emaar Properties and Emirates Property Holdings Limited (EPHL).
The compulsory acquisition process, known as a squeeze-out, is provided for under Article 11(2) of the Resolution of the Chairman of the Board of Directors of the Capital Market Authority No. (18/R.M) of 2017 regarding the Rules of Acquisition and Merger of Public Joint Stock Companies, as amended.
Emaar Properties intends to begin the compulsory acquisition procedure within 60 days of the settlement date if the threshold is reached.
Shareholders whose shares are compulsorily acquired will receive the same consideration per share, in the same form and on the same terms, as those accepting the voluntary offer, according to the document.
Meanwhile, Emaar said the the voluntary cash offer opens on November 6 and is scheduled to close at 3pm UAE time on December 10, unless extended.
The offer is not conditional on reaching the squeeze-out threshold. Emaar Properties said it still intends to complete the offer and acquire all shares validly tendered even if the threshold is not reached.
Emaar Properties and EPHL currently hold a combined 80.1613% of Emaar Development. The offer covers the remaining 793.55 million shares, representing 19.8387% of its issued share capital.
The company said the offer gives minority shareholders an opportunity to realise their investment fully in cash, at a premium.
The Dh15 offer price represents a 19.4% premium to Emaar Development’s closing price of Dh12.56 on November 2, the last trading day before the announcement of the board meeting. It is also a 3.3% premium to the closing price of Dh14.52 on November 5.
The offer represents premiums of 21.7%, 18.6% and 15.7% to the one-week, one-month and three-month volume-weighted average prices, respectively, as of November 2. It is 148.8% above the Dh6.03 subscription price ahead of Emaar Development’s listing in November 2017.
The document warned that shareholders who do not accept the offer could face reduced trading liquidity if the transaction completes without reaching the squeeze-out threshold.
In that situation, the number of shares held by the public, known as the free float, is likely to fall significantly. This could make the shares harder to sell and increase volatility in their trading price.
Remaining shareholders may only be able to sell at a price below the offer price, the document said. Emaar Properties gave no guarantee that another offer would be made or that any subsequent offer would match or exceed the current price.
The company also intends to review Emaar Development’s dividend policy after completing the offer, taking account of its financial position, capital requirements, growth plans and applicable law.
Shareholders who retain their holdings have no assurance that dividends will continue at the same level or frequency as before the offer, it said.
Explaining the strategic rationale, Emaar Properties said full ownership would bring the UAE development business under a single framework for managing and allocating capital.
The acquisition would simplify the group’s structure and allow its domestic development business to operate on a fully integrated basis within the wider group.
This would bring land allocation, funding and development cash flows under one framework, integrate the development platform with recurring income businesses and remove duplicated costs and governance requirements associated with a separate listing.
Once the compulsory acquisition is completed, Emaar Properties intends to propose and vote for resolutions converting Emaar Development into a private joint stock company and apply for its delisting from the DFM.
Following conversion and delisting, Emaar Development shares would no longer trade on the DFM, and the company would cease to be subject to the disclosure and governance requirements applicable to listed public joint stock companies.
Emaar Properties said that it has sufficient resources to meet the full cash consideration payable under the offer.
