Arkan Building Materials Company. listed in Abu Dhabi, said its shareholders have approved a proposal to combine the company with Emirates Steel.
The deal will create a listed "national champion in the building materials and construction sector" that has strong potential to grow regionally and internationally, the company said on Monday.
Arkan will acquire Emirates Steel from Senaat, which is part of Abu Dhabi's holding company, ADQ. The deal was announced in May this year and was approved by Arkan's board in June.
“The combined group will benefit from a strengthened balance sheet and operational scale. In particular, it will play a key role in supporting the sustainable economic growth targets outlined in the UAE’s Industrial Strategy ‘Operation 300 Billion’, building on Emirates Steel’s position as a leading industrial player that adopts the latest technologies in steel production, quality control and sustainability practices,” said Jamal Al Dhaheri, chairman of Arkan.
Emirates Steel will be transferred to Arkan for a convertible instrument, which would automatically convert into 5.1 billion ordinary shares in Arkan at a fixed price of Dh 0.798 per share following the deal.
After the conversion, Senaat would own 87.5 per cent of the entire issued share capital of Arkan.
The transaction is expected to close later this year. Until then, both companies will continue to operate independently, Arkan said.
The UAE aims to more than double the contribution of the industrial sector to the country's overall economic output to Dh300bn by 2031, from Dh133bn currently as part of the new industrial strategy announced in March.
The new combined entity is well placed to tap into the post-Covid recovery anticipated in the UAE’s industrial construction sectors as a result of such initiatives, Arkan said.
Senaat, which manages more than Dh27.2bn of industrial assets, has holdings in metals, oil and gas services, construction and building materials and food and beverages. In March 2020, ADQ assumed the ownership of Senaat, after which the conglomerate has been consolidating its holdings.
