Emaar receives regulatory approval to merge with its shopping malls unit

The deal is expected to be completed before the end of this year

Dubai Marina Mall. Assets and liabilities of Emaar Malls will be assumed by Emaar Properties once the deal is completed. Jeffrey E Biteng / The National

Emaar Properties and its shopping malls unit, Emaar Malls, have received final regulatory approval to merge, as the UAE’s biggest listed property developer consolidates its business amid pandemic-driven headwinds.

The companies secured the approval of the Securities and Commodities Authority to proceed for the proposed combination that will help reinforce Emaar’s position as one of the top integrated and diversified real estate companies in the Middle East and North Africa region, the two companies said in a joint statement to the Dubai Financial Market, where their shares are traded.

The merger will ensure “both Emaar Properties and Emaar Malls are strategically positioned to capture opportunities in the marketplace and drive shareholder value”, the companies said on Monday.

The deal, which was unanimously recommended by the boards of both companies, will be carried out as a “statutory merger” with Emaar Malls’ shareholders receiving 0.51 Emaar Properties shares for every Emaar Malls share held, according to the statement.

This represents a premium of 7.1 per cent of Dh1.70 per share – the closing price of Emaar Malls' share on March 1, the last trading day prior to the merger announcement.

It is also a premium of 3.5 per cent on the closing price of Emaar Malls' Dh2.10 per share on September 1 and a “premium of 4.4 per cent to the market implied exchange ratio based on volume weighted average prices over the last one month to September 1”, the companies said.

The merger still requires approval of 75 per cent of shareholders in each company. The two sets of shareholders are expected to vote on the deal in their separate general assemblies on October 10.

Assets and liabilities of Emaar Malls – including the rights and liabilities of Emaar Malls’ $750 million sukuk due in 2024 – will be assumed by Emaar Properties once the deal is completed.

The transaction is expected to be completed by the end of this year, the company said.

The existing business of Emaar Malls will also be “reconstituted in a wholly-owned subsidiary” of Emaar Properties, the companies said.

In March, Emaar said that its malls unit will continue to develop the portfolio of retail assets, while Emaar Properties will remain listed on the DFM after the merger.

Emaar Malls, which owns and operates assets including The Dubai Mall and Dubai Marina Mall, swung to a profit in the second quarter of this year after posting a loss in the same period a year ago, as the emirate's retail sector continued to recover from the pandemic.

The quarterly net income climbed to Dh304m, compared with a Dh33m loss a year ago, with revenue surging 74 per cent to Dh1.15 billion, it said in a statement in August.

Emaar Malls plans to open its Dubai Hills Mall in the first quarter of 2022, which will have up to 600 outlets and a gross leasable area of 2 million square feet (185,806 square metres).