Founder of Dubai's DAMAC offers to take property firm private

3 minute read

Hussain Sajwani, founder and chairman of Dubai's DAMAC Properties poses for the camera during an interview with Reuters at his office in Dubai, August 30, 2017. REUTERS/Saeed Azhar

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DUBAI, June 9 (Reuters) - United Arab Emirates property tycoon Hussain Sajwani made an offer on Wednesday to buy out minority shareholders in DAMAC Properties (DAMAC.DU), which he has run for nearly two decades.

The all-cash offer comes amid a years-long slump in Dubai's once hot property market, a decline exacerbated by the economic hit from the COVID-19 pandemic.

DAMAC is best known for building the Middle East's only Trump-brand golf course, which opened in Dubai in 2017 while Donald Trump was U.S. president.

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The deal confirms a Reuters report in 2020 that Sajwani was considering buying out minority shareholders.

Sajwani, who resigned both as chairman and from the board, made the offer through investment vehicle Maple Invest Co.

He directly and indirectly owns 72.215% of DAMAC, according to the latest regulatory filing.

Maple is offering to buy out minority shareholders at Tuesday's closing price of 1.30 dirhams per share, valuing the offer at 2.185 billion dirhams ($595 million).

In an earlier filing Maple had said the ultimate offerer directly and indirectly controls 88.106% of DAMAC, which would make the value of the offer equal to $255 million.

It was not immediately clear why there was a difference in the value of the deal in the two filings.

Maple Invest Co intends to increase the holding to at least 90% plus one so it can exercise its right to buy out the remaining minority shareholders, it said in a statement.

DAMAC, listed in Dubai since 2015, would then be delisted.

The deal values DAMAC at $2.1 billion, at par with its market value on Tuesday. Its shares were down 2.3% at 1.27 dirhams on Wednesday, below the buyout offer price.

S&P Global has a negative outlook on DAMAC's credit rating due to the weak market recovery, S&P Globals property analyst Sapna Jagtiani said.

Despite more transactions and slightly higher residential property prices in the first quarter of 2021, Jagtiani said prices for most real estate segments "will be constrained due to this fundamental issue of oversupply."

DAMAC posted annual losses in 2019 and 2020, with Sajwani warning last year of difficult years ahead.

DAMAC shares are flat so far this year, while shares of Emaar Properties, Dubai's largest listed developer, are up 16%.

Since Sajwani set up DAMAC in 2002, it has built 33,000 homes and has 33,000 more under construction, its website says.

DAMAC's core business is Dubai property development but it has also launched projects elsewhere in the Middle East and is building the Nine Elms tower in London.

($1 = 3.6728 UAE dirham)

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Reporting by Saeed Azhar; editing by Jason Neely

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