Potential Aldar & Surouh Merger – A Multi-billion Rescue at Hand?

Talk of a merger between Abu Dhabi developers Aldar Properties and Sorouh Real Estate has the industry in the Middle East abuzz. The highly indebted companies would merge into a $15 billion plus entity is the announcement by Sorouh’s managing director Abu Bakr Seddiqi al-Khoury rings true.

Sorouh Gates construction

Sorouh Gates construction – courtesy Sorouh

Aldar, the company that developed Abu Dhabi’s Yas Marina Formula One race circuit, has been massively funded by the government there.  With recent EU economic woes increasing, and the price of oil stagnant, its the companies are a bit “on the ropes” as far as potential profitability and liquidity are concerned. Goldman Sachs and the National Bank of Abu Dhabi are leading talks over the proposed merger, while Credit Suisse advises Aldar, and Morgan Stanley works with Sorouh individually. Challenges remain regardless of any talks however, the country being faced with ever increasing suppl-demand concerns regarding their property holdings.

Shares of the two companies jumped a bit on the news of a potential merger Aldar still being up 35.9 percent year-to-date and Sorouh up 36 percent, according to reports. On a final note here, if attention to a corporate website means anything at all, Aldar’s new one, plus the fact that there has been no press release posted on the old one in a year, shows a company focused elsewhere beyond growth for us. Aldar’s last press release spoke of the Abu Dhabi Education Council penning a deal with the property group in October of 2011.

As for the most recent construction project reports, this PDF from the firm shows a bit of where those billions are tied up. Not to be too critical, but throwing money into such projects as YAS Water World Abu Dhabi at a time when most of the world cannot afford lunch, this is not exactly gripping investment potential.

As for Sorouh, the news front is slightly better online visibility wise at least. The company website shows a release having been made for the completion of the world’s tallest bridge structure of a penthouse at ey residential development. We’re not sure exactly who keeps records of such world records, but Richard Amos, the company’s CFO, looks as if he’s lost some sleep in the 2012 report given below. Not to sound too critical, sometimes the little signs add up to a lot in these matter. It remains to be seen if the two companies will merge, and whether or not any such merger can result in black ink for those concerned.