Aabar Investments Plans Offer to Buy 70% of Arabtec

(Update1) http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a55NJFNchmsQ

By Ben Martin and Arif Sharif

Jan. 8 (Bloomberg) -- Aabar Investments PJSC, an Abu Dhabi government-owned investor, said it plans to make an offer to buy 70 percent of Arabtec Holding PJSC.

Aabar will buy mandatory convertible bonds issued by Arabtec, which will convert into shares at a price of 2.3 dirhams each, the company said in a statement dated Jan. 7 on its Web site.

While that is a 20 percent discount to Arabtec’s closing share price yesterday, Aabar “can potentially give Arabtec access to a considerable pipeline of projects in Abu Dhabi, thus securing backlog growth,” Ahmed Badr, an analyst at Credit Suisse Group AG, wrote in a Jan. 7 note.

Arabtec, the United Arab Emirates’ biggest construction company, said on Jan. 5 it may not pay a dividend this year as it’s owed 2 billion dirhams ($544 million). Aabar would provide Arabtec with a cash injection of 6.4 billion dirhams, plugging any shortfall in working capital resulting from potential payment defaults by clients in Dubai, Credit Suisse said.

Arabtec gained 6.3 percent to 2.89 dirhams in Dubai trading yesterday, valuing the company at 3.46 billion dirhams.

On Dec. 30, Arabtec denied speculation that Aabar may invest in the company.

Aabar wants to raise its stake in Daimler AG, the world’s second-largest maker of luxury cars, to 15 percent from 9.1 percent, the investment fund’s chairman said in November. It paid $2.7 billion for its stake in March, becoming the largest shareholder in the maker of Mercedes-Benz cars and trucks.

To contact the reporter on this story: Ben Martin in London bmartin38@bloomberg.net.

Last Updated: January 8, 2010 11:53 EST