Mannai Corporation of Qatar has taken control of the troubled Dubai jeweller Damas after more than three-quarters of shareholders agreed to its US$445 million (Dh1.63 billion) takeover bid.
The deal is likely to put an end to years of turmoil after the Abdullah brothers Tawfique, Tawhid and Tamjid,Damas's owners before the company went public, made huge unauthorised withdrawals of company assets that pushed Damas close to insolvency.
Mannai led a consortium that also included the Egyptian investment bank EFG-Hermes and the brothers, offering 45 US cents per share.
"This effectively means the consortium has now acquired control," the company said in a statement to Nasdaq Dubai yesterday.
The new owners intend to delist Damas from the exchange, which is based in the DIFC.
Damas shares have risen 96 per cent so far this year to trade at 43.5 cents yesterday after the Abdullah brothers said they were looking to sell some of the company.
Mannai, a conglomerate selling cars, home appliances and other goods, will take a 66 per cent stake, EFG-Hermes will own 19 per cent and the Abdullah brothers will retain 15 per cent. After the takeover by Mannai, the Abdullah brothers will receive $165m for selling their stake in the company.
"Mannai has done its due diligence on the company and clearly sees value out of this acquisition," said Mohammed Ali Yasin, an independent analyst in Abu Dhabi. "What brought down Damas was not its jewellery business, but getting into real estate where it had no experience and other issues. The retailer will benefit from synergies with Mannai's numerous retail outlets."
The Abdullah brothers were the subject of the strictest disciplinary action in the history of the Dubai International Financial Centre, in March 2010, for "improperly withdrawing" Dh365m of cash and almost two tonnes of gold valued at Dh250m from Damas without shareholder approval.
The brothers owned Damas before it became a public company in 2008. They owe the company more than Dh600m. They owe a further Dh1.2bn to banks, bringing their total obligations to Dh1.8bn. Until the Mannai takeover, they were 51 per cent shareholders in the company.
The jeweller signed an agreement last year with banks and the brothers, who were given three years to repay in the hope that their assets would appreciate in value.
Much of the brothers' wealth is tied up in property and investments that creditors hope will eventually increase in value.
Last May, Damas repaid Dh200m of loans to banks and completed a Dh3bn debt restructuring in which it is to repay Dh1.1bn of loans over three years and receive working capital of Dh1.9bn.
* with additional reporting by Rory Jones
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