Depa finds comfort with Singapore purchase

Depa, the contractor that installed the interior of the Burj Khalifa, has paid US$108.7 millionfor a furniture maker based in Singapore as it expands its presence in Asia.

Depa, the contractor that installed the interior of the world's tallest tower, the Burj Khalifa, has paid US$108.7 million (Dh399.2m) for a furniture maker based in Singapore as it expands its presence in Asia. It increased its shareholding in Design Studio Furniture Manufacturer to a controlling stake of 90.5 per cent. The acquisition values Design Studio at S$165.9m (Dh450.3m). "This acquisition is another key element in our long-term diversification plan, giving us greater exposure to the South East Asian markets where we see significant opportunities," said Mohannad Sweid, the chief executive of Depa. "Design Studio has a strong order book at S$183m as of June 30 and ? we are excited about the long-term outlook."

Shares in Design Studio, which trade on Singapore's stock exchange, were suspended on Friday because the amount of the company's stock held in public hands fell below 10 per cent. In 2008, Depa and Design Studio launched their joint-venture company DDS Contracts & Interior Solutions, with Depa holding 55 per cent and Design Studio 45 per cent. Depa's initial offer to buy the Singapore-listed company, announced in June, was met with a lukewarm reception from minority shareholders, according to press reports.

The company initially offered S$0.55 a share for Design Studio, valuing the company at about S$140.4m. It later raised the offer to S$0.65. Depa last week said it was continuing to increase the share of revenues and projects from outside its Dubai base, particularly in markets such as Singapore and Abu Dhabi, as it reported a loss of Dh103.6m for the first half of this year. The contractor linked the loss to expenses relating to work done on the Burj Khalifa. It did not disclose the name of the entity involved, but said the claim was not against Emaar Properties, the master developer behind the building.

Depa's acquisition of Design Studio will give it access to a Singaporean property market that has rebounded this year. The tiny city state topped the league of second-quarter house price gains with prices rising by more than 34 per cent compared with the second quarter last year, according to a survey of 36 markets conducted by Bloomberg. Depa also hopes to boost its business in Abu Dhabi, where its revenues were up 51 per cent to Dh195.3m in the first half of this year from the same period last year.

It has also won orders in Malaysia, Saudi Arabia, Qatar and China. Shares in Depa fell by 3.33 per cent on Thursday as the company reported its first-half loss. [e-mail]