Arkan’s Board Of Directors Approves Emirates Steel Transaction

Arkan Building Materials Company PJSC (“Arkan”), a leading construction and building materials company in the UAE, today announced that its Board of Directors has agreed to proceed with a strategic transaction to acquire Emirates Steel Industries PJSC (“Emirates Steel”), the leading integrated steel manufacturer in the Middle East region.

The Board resolved to recommend to Arkan shareholders that they approve the offer received from General Holding Corporation PJSC (“Senaat”) on May 9th to acquire its wholly-owned subsidiary Emirates Steel based in Abu Dhabi.

The key terms of Senaat’s offer are to transfer Emirates Steel to Arkan in consideration for the issuance by Arkan to Senaat of a convertible instrument. Upon closing of the transaction, the convertible instrument would automatically convert into 5.1 billion ordinary shares in Arkan at a fixed price of AED 0.798 per share. Following the conversion, Senaat would own 87.5% of the entire issued share capital of Arkan.

Eng. Jamal Salem Al Dhaheri, Chairman of Arkan, said: “Arkan is poised to capitalize on emerging opportunities in the construction and building materials sectors, as the world begins to recover from the COVID-19 pandemic. This transaction with Emirates Steel will accelerate our ambitions by combining two sector leaders in the UAE, thereby expanding our product portfolio and order book significantly.

“The deal has substantial value-enhancing potential, and we expect it to be accretive for Arkan’s shareholders. It will strengthen Arkan’s balance sheet and financial performance, deliver greater international scale, and position Arkan to become an entry point for investing in a key regional sector while playing a key role in the UAE’s Industrial Strategy ‘Operation 300 Billon.’”

The proposed transaction would create a listed national champion in the building materials and construction sectors, with strong potential for growth in the UAE and internationally. The combined entity will be optimally positioned to benefit from the post-Covid recovery anticipated in the UAE’s and the region’s construction sectors, thanks to an expected acceleration in infrastructure projects as a result of various governmental stimulus programmes locally and regionally.

The transaction will now be put forward to Arkan’s General Assembly and is subject to regulatory and shareholder approvals.