DUBAI (Reuters) - Dubai’s Arabtec said on Sunday the due diligence date for its $1.7-billion merger with Aabar Investments had been extended to April 16, in a move that will encourage investors that the deal will progress.
“Because of the enormity of the task at hand and the limited time frame, both parties agreed to amend the subscription agreement and the term sheet to extend the due diligence date to midnight April 16 2010,” the United Arab Emirates’ largest contractor by market value said in a statement on the bourse website.
Under the agreement, Abu Dhabi’s Aabar in January had agreed to acquire a 70 percent stake in Arabtec in a deal valued at about $1.7 billion.
Earlier in February, Arabtec’s chief financial officer told Reuters the deal was on track with a possible closure in March.
“I think the news is encouraging as it shows the deal is live,” said Ali Khan, managing director at Arqaam Capital in Dubai.
“Delays in due diligence can be a common occurrence, however some words of encouragement from Aabar would be welcomed as well,” he added.
Arabtec stopped work on one of troubled Dubai developer Nakheel’s largest housing projects because it had not been paid by the Dubai World-owned firm, the National reported on Thursday.
Arabtec’s chief executive said no payments had come through from the developer since December’s $10 billion cash injection from Abu Dhabi.
Shares of Arabtec were down 1 percent, while Aabar shares were flat at 1:15 a.m. EST.
Earlier in February Deutsche Bank cut the Arabtec’s price target to 3 dirhams from 4.5 dirhams.
Reporting by Jason Benham; Editing by David Fox