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.

The deal, announced on Tuesday, is expected to be wrapped up by the end of the second quarter, IBM announced.

IBM shares reacted well to news of the acquisition. Image courtesy of llatech.com

In a statement by IBM, the computer giant said that in acquiring the Las Vegas based Tririga Inc., it would be able to accelerate its program for smarter buildings, which utilize technology in order to cut down on printing and save on energy.

IMB was most interested in Tririga’s software products, as they are well known as some of the best available on the market for helping organizations to optimize the use of buildings. Tririga’s best known software assists organizations in making long-term planning decisions about real estate, while another popular program in their suite is able to evaluate the condition of a building, so that the owners can prioritize where and when upgrades need to be made.

Tririga's software is able to vastly improve building efficiency. Image courtesy of http://sites.google.com

Other Tririga programs include applications that can monitor the environmental impact buildings have on their surroundings, allowing for the owners to identify problem systems and improve them before too much damage is done.

No jobs are thought to be affected by this acquisition. Instead, Tririga and its 200 employees will be swallowed up by the IBM Global Business Services and IBM Tivoli Software divisions.

Tririga will become part of the IBM empire. Image courtesy of info.tririga.com

The move was also well received by stock market investors, with IBM shares appreciating in value by 10 cents on Tuesday afternoon, rising to $157.78 by yesterday’s close.

Under consideration is the  combining in an all-stock, at-market transaction reliant upon trading prices of both companies’ stock. In the release from the ProLogis website, it is apparent that no further elaboration will be forthcoming until the companies have come to a mutual decision, or negotiations have been discontinued.

ProLogis is the leading provider of distribution facilities and industrial space with more than 435 million square feet under their banner. For AMB’s part, their nearly 160 million square feet, and their global reach will add significantly to the emerging company’s reach.

ProLogis the world's largest industiral landlord

Neither Hamid R. Moghadam, CEO of AMB, nor ProLogis’ head Walter C. Rakowich have made comment. As for the International impact of this potential merger, Takashi Ishizawa, a real estate analyst at Mizuho Securities Co. in Tokyo, told Bloomberg:

“In the U.S., the warehouse industry is the biggest in terms of space and most important sector for property investment. The merger is positive for the companies to increase their competitiveness and promote expansion.”

AMB industrial complexes in Europe are extensive

ProLogis for one was hard hit by the financial crisis. The company has an international presence of massive scope with a presence in 105 markets in 19 countries. The company reported five consecutive quarters of losses since the recession struck as the demand for distribution spaces waned.

AMB suffered a similar fate obviously, and now many experts feel this merger is a cost cutting effort as much as a strategic positive forward event. By closing offices that will be redundant, and cutting some staff, the two commercial behemoths can obviously safe tens, if not hundreds of millions joining forces.

ProLogis Heathrow

Meanwhile, Ilaina Jonas of Reuters reports that this “supposed” merger of equals may actually be a buyout by the smaller AMB. While ProLogis is the larger of the two, that company’s near collapse in 2008 because of massive debt is a factor to be considered. For the last two years Rakowich’s company has been selling off properties and refinancing debt. The weaker balance sheet of ProLogis actually tells the tale of these talks in all likelihood.

At the close of trading yesterday, both stocks showed significant change and activity with ProLogis up almost 8 % at 15.87,  and AMB finishing at plus more than 3.5 % at 34.01. However we consider this merger, it’s clear it makes sense from a practical standpoint at the very least. Sustainablity, something both companies adhere to in their dogma, demands efficiency. Having redundancy where none is needed is poor logistics after all. We will follow this merger and report as news arrives.

ProLogis AMB stocks at close of business