Bloomberg News

Aldar Falls on Bets Merger-Driven Rise Overdone: Abu Dhabi Mover

March 15, 2012

Aldar Properties PJSC (ALDAR) and Sorouh Real Estate Co. (SOROUH) fell the most in more than a week on speculation gains driven by merger talks between the Abu Dhabi real-estate developers were overdone.

Aldar, the biggest property developer in the United Arab Emirates capital, fell 3.5 percent, its biggest drop since March 7, at the 2:00 p.m. close in Abu Dhabi. Sorouh lost 4.1 percent, also the largest decline in more than a week. The drops trimmed gains in Aldar this week to 24 percent and in Sorouh to 23 percent. The benchmark ADX General Index (ADSMI) fell 0.2 percent to 2,625.85, paring its climb this week to 2.5 percent.

Aldar and Sorouh, which fell 60 percent and 48 percent, respectively, in 2011, said in a joint statement on March 11 they set up a team to study a possible merger with the “blessing” of the Abu Dhabi government. The two companies are are involved in the emirate’s drive to transform itself into a tourism and business hub as it strives to diversify its economy away from relying on oil.

“It’s profit taking before the weekend,”said Musa Haddad, head trader at the National Bank of Abu Dhabi PJSC (NBAD)’s asset- management group.

Government-owned Mubadala Development Co. holds 49 percent of Aldar, while the Abu Dhabi Investment Authority, a sovereign wealth fund, has a 7 percent stake in Sorouh. The team studying the merger will present a plan in the next three months, the companies said this week.

Whether a rally in the shares will resume “depends on how this merger takes place and who is going to benefit the most of it,” Haddad said. “But in general it is good for both because at least we wouldn’t have two companies competing for the same projects.”

To contact the reporter on this story: Alaa Shahine in Dubai at asalha@bloomberg.net

To contact the editor responsible for this story: Claudia Maedler at cmaedler@bloomberg.net


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