Senaat intends to merge Emirates Steel with Arkan Building Materials

ABU DHABI: General Holding Corporation (Senaat) has expressed intention to combine its wholly-owned subsidiary Emirates Steel Industries with Arkan Building Materials Company (ADX: ARKAN).

“The Board of Directors of Arkan Building Materials Company (ADX: ARKAN), a leading construction and building materials company in the UAE, has received an offer from General Holding Corporation (Senaat) to combine its wholly-owned subsidiary, Emirates Steel Industries with Arkan,” a bourse filing said.

Emirates Steel is a leading integrated steel manufacturer in the Middle East region, based in Abu Dhabi. The key terms of Senaat’s offer are to transfer Emirates Steel to Arkan in consideration of the issuance by Arkan to Senaat of a convertible instrument.

Upon closing of the transaction, the convertible instrument would automatically convert into approximately 5.1 billion ordinary shares at a fixed price of AED 0.798 per share in Arkan’s capital.

When applied to Senaat’s valuation of Emirates Steel, the offer implies an equity value for Arkan of approximately AED 1.4 billion. Post completion, Senaat would own approximately 87.5 percent of the entire issued share capital of the combined group.

The Board of Arkan will consider the transaction proposed by Senaat before making any recommendation to shareholders. Should an agreement be reached between the two parties, an Arkan general assembly meeting would consider approving the transaction during H2 2021.

At this time, there is no certainty that any transaction will occur. The offer is subject to receipt of all relevant governmental approvals including regulatory approvals by the Securities and Commodities Authority (SCA), as well as shareholder approvals.

Arkan Building Materials Company (ADX: ARKAN) is a public joint stock company specialising in the manufacturing of building and construction products in the UAE. Arkan’s vision is to build a large integrated building products business that serves the local and regional construction industries. Arkan’s portfolio companies include the Al Ain Cement Factory, Emirates Blocks Factories, ANABEEB and Arkan Dry Mortar.

Through Senaat, Arkan is part of ADQ, one of the region’s largest holding companies with a broad portfolio of major enterprises spanning key sectors of Abu Dhabi’s diversified economy.

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