Dubai-based developer Emaar Properties PJSC, known for the world’s tallest tower, is planning to take over its malls unit due to the coronavirus pandemic exacerbating the property downturn in the Middle East business and tourism hub.
The developer owns 85% of Emaar Malls. It proposed to pay 0.51 share for every Emaar Malls share, and the value of the business is at 24 billion dirhams (US$6.5bil). The current offer values of Emaar Malls is at 1.85 dirhams per share.
It is worth noting that in Dubai property is glutting and its demand is faltering. Hence the prices are down by more than a third. In 2014, Emaar properties sold its share in Emaar Malls.
Arqaam Capital, in a research note, said, “Even though we think the offer will be accepted by the minority shareholders of Emaar Malls, the low premium offered and the discount to the initial public offer (IPO) price may not be welcomed by investors.”
Pandemic has taken a toll on businesses but Emaar Malls posted a wider-than-expected loss for the year. The shares of Emaar Properties last closed at 3.63 dirhams and Emaar Malls ended at 1.69 dirhams. Emaar Malls shares lost 42% of their value since October 2014.