Emaar blocks Dubai Holdings merger, shares surge

Shares in Dubai-based Emaar Properties surged by nearly 15 percent, their highest rise in more than a year, on the news that it has blocked its proposed merger with real estate companies controlled by conglomerate Dubai Holdings.

Dubai-based Emaar Properties has halted its proposed merger with real estate companies of Dubai Holding, the conglomerate owned by the emirate’s ruler Sheikh Mohammed bin Rashid al-Maktoum.

Emaar has blocked the move to combine with Dubai Holding’s Dubai Properties, Sama Dubai and Tatweer, the leisure real estate firm, in a bid to protect itself from the maelstrom being experienced in the emirate currently, according to multiple reports. The merger was first announced in June.

The news sent Emaar’s shares surging by 14.8 percent, enabling Dubai’s index to make its largest one-day gain for 41 weeks, Reuters said. It was also the biggest rise in Emaar shares since November last year.

According to a report by the Financial Times, the announcement was made by the Dubai government, which also owns a 32 percent stake in Emaar. The newspaper reported the move was part of a wider strategy to separate the emirate’s  good assets from its bad after Dubai World, late last month, revealed it was struggling to meet its debt obligations.

Dubai World sent world economies spinning after it asked for a six-month extension on a large proportion of its $60 billion debt, later confirmed to be approximately $26 billion related to a number of its real estate companies, including the well-known Nakheel Holdings, the firm behind Dubai’s iconic “The World” development.

Analysts contacted by the Financial Times suggested the news pointed to Dubai Holdings becoming the next conglomerate to seek a comprehensive restructuring of its debt position. It owes more than $10 billion, $2 billion of which matures next year.