Abu Dhabi's General Holding Corp (Senaat) is seeking the merger of Arkan (ARKAN.AD) and Emirates Steel to create United Arab Emirates' biggest steel and building materials company.
Senaat, which is backed by Abu Dhabi state-owned ADQ, currently owns 51% of Arkan and all of unlisted Emirates Steel.
Arkan will issue a convertible instrument to Senaat under the proposed merger deal that would automatically convert into approximately 5.1 billion ordinary shares in the capital of the company at 0.798 dirhams per share, Senaat said in a statement.
This would imply a valuation of 1.4 billion dirhams ($381 million) for Arkan.
After the deal is completed, Senaat would own about 87.5% of the entire issued share capital of the combined group.
The proposed merged entity would have total assets worth 13 billion dirham ($3.54 billion), it said.
The deal is another sign of consolidation among companies backed by ADQ.
ADQ owns Abu Dhabi Ports, Abu Dhabi Airport and bourse operator ADX. It has also built up a portfolio of food and agriculture businesses and last year bought a 45% stake in commodities trader Louis Dreyfus Co.
Rothschild & Co is acting as financial adviser and Allen & Overy LLP as legal adviser to Senaat and its shareholder ADQ for the proposed Arkan-Emirates Steel merger.
($1 = 3.6728 UAE dirham)
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ADQ-backed Senaat seeks merger between Arkan and Emirates Steel - Reuters
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