Shares fall as Dubai Financial Market Company ‘cannot confirm or deny’ merger talks

Shares of Dubai Financial Market Company fell six per cent in early trading on Thursday after the region’s only listed bourse said it ‘cannot confirm or deny’ a report that its controlling shareholder has hired banks to advise on a merger with the Abu Dhabi Securities Exchange.

Dubai Financial Market Company says it ‘cannot confirm or deny’ speculation over a merger with the Abu Dhabi Securities Exchange. AFP PHOTO/Karim Sahib

Dubai Financial Market Company’s stock fell almost 6 per cent yesterday after the region’s only listed bourse said it “cannot confirm or deny” a report that its controlling shareholder had hired banks to advise on a merger with the Abu Dhabi Securities Exchange.

Speculation over such a deal first surfaced in May 2010, but no progress has been made public since the initial announcements from both bourses.

The UAE has three stock exchanges: ADX, DFM, and Nasdaq Dubai. The latter has been incorporated into DFM.

“As DFM Company, we are not directly involved in any discussions about the subject, if any and their outcome,” Essa Abdul Fattah Kazim, DFM’s chief executive, said on Wednesday after the market closed.

“Hence we have no further information that can be disclosed, and we are not in a position to confirm or deny the Reuters report published today [Wednesday],” he said.

Shares of the bourse fell 5.56 per cent yesterday to close at Dh2.21 each, following Mr Kazim’s comment.

A Reuters report on Wednesday said the Abu Dhabi Executive Council, the emirate’s top decision-making body, had hired JPMorgan Chase and First Gulf Bank to serve as its advisers for the merger.

Investment Corporation of Dubai (ICD), which controls the emirate’s two bourses, has reportedly appointed Citigroup.

DFM shares surged 15 per cent on Wednesday, hitting their maximum daily trading limit, following the release of the Reuters report.

Sultan Al Mansouri, the UAE’s Minister of Economy, in March last year reassured the market that the plans were still being considered.

“The deal is not off the table. [The merger] is still being discussed,” he said then.

Markets in the UAE have benefited from a trading bonanza over the past year, amid renewed investor interest, boosted by a strong economic recovery and an uptick in merger and acquisition activity in blue-chip companies.

The ADX General Index has risen more than 55.4 per cent this year, while the DFM General Index has gained almost 81.7 per cent in the same period.