Abu Dhabi stocks rose the most in two weeks after Aldar Properties and Sorouh Real Estate, the emirate’s biggest developers, said they are considering a merger that may create a company with US$15bn in assets.
Aldar, Abu Dhabi’s biggest property developer, and Sorouh, the emirate’s second-largest real estate firm, rallied to the highest in almost nine months. The benchmark ADX General Index rose 1.1 percent, the most since February 26, to 2,614.83, at the 2 pm close in the emirate. The Bloomberg GCC 200 Index fell 0.2 percent.
The two companies, which are involved in Abu Dhabi’s drive to transform itself into a tourism and business hub, said in a joint statement yesterday that they set up a team to study a possible merger with the “blessing” of the sheikhdom’s government. The team will present a plan in the next three months. Aldar and Sorouh advanced 9.8 percent, the most since October 2008 and December 2009, respectively. They both closed at AED1.34, their highest since June.
“The deal signals that the UAE government is committed to building a strong real estate development company that could withstand the current market turmoil in real estate,” said Nabil Farhat, a partner at Abu Dhabi-based Al Fajer Securities. “Both companies will eventually benefit under the new entity by getting new government projects, and access to cheap liquidity under the new structure. It is a win-win situation for all parties.”