UPDATE 1-Dubai's Arabtec in joint venture with Samsung Engineering

Wed Apr 17, 2013 8:27am EDT

Related Topics

* Arabtec to own 60 pct of new firm, Samsung rest

* New company to be named Arabtec-Samsung Engineering

* Co to bid for regional contracts worth $3-$10 bln (Adds details, background)

DUBAI, April 17 (Reuters) - Arabtec, the contractor part-owned by Abu Dhabi state fund Aabar, agreed with Korea's Samsung Engineering Co to jointly form a new company that will focus on large energy and power-related projects in the region.

The Dubai-based builder, which is planning a $1.8 billion capital increase as part of its expansion drive, said the new firm would be 60 percent owned by Arabtec and headquartered in the oil-rich United Arab Emirates capital of Abu Dhabi.

Samsung Engineering would own the remaining 40 percent, the two companies said in a joint bourse statement on Wednesday.

The partnership builds on the growing political and economic ties between Abu Dhabi and South Korea, with Korean companies also leading the construction of the UAE's first nuclear power plant, a project worth around $20 billion.

Under the terms of the agreement, Arabtec-Samsung Engineering will bid for projects in oil and gas, power and infrastructure sectors in the Middle East and North Africa, for contracts ranging between $3-$10 billion, the statement said.

Samsung has been aggressively growing in the region and has, along with a consortium of contractors, won several billion-dollar contracts in countries such as Saudi Arabia, Iraq, the UAE and other regional nations.

"Samsung Engineering is currently executing major projects in the UAE worth $9 billion," said Park Ki-Seok, Samsung Engineering's president and chief executive. It has a backlog of $10 billion in oil and gas, power and infrastructure in the MENA region.

Meanwhile, Arabtec will use the deal to push ahead with its ambition to grow in the oil & gas construction sector.

Arabtec is also set to acquire the remaining 40 percent it does not already own in UAE oil and gas construction firm Target Engineering, according to sources familiar with the plan.

Arabtec replaced its chief executive in February as part of the shake-up led by Aabar, which has been tightening its grip on the group.

The group's chief executive has said that the company will look to growth through a series of acquisitions and joint ventures.

"We are currently considering further joint ventures, with world class companies to progress other areas of Arabtec's growth strategy," Khadem al-Qubaisi, the chairman of Arabtec said in the statement. (Reporting by Praveen Menon; Editing by Dinesh Nair and Elaine Hardcastle)

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