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Arabtec ex-CEO rejects Aabar offer

Arabtec logo is seen on buildings under construction in the Marina area of DubaiArabtec Holding Co. (ARTC) declined for the first time in nine days after former chief executive officer Hasan Ismaik turned down an offer from Aabar Investments PJSC to buy part of his stake in the company.

Arabtec, the United Arab Emirates’ largest publicly traded builder, lost 1.7 percent to close at 4.71 dirhams, the biggest drop since Aug. 12. It jumped 13 percent in the previous five days on speculation a deal between Aabar, a government-linked investment company, and Ismaik was nearing a conclusion.

Ismaik, the company’s biggest shareholder, said by telephone yesterday he turned down Aabar’s offer of 5 dirhams a share, and that both parties are still in talks about the sale. Aabar is seeking to buy at least half of Ismaik’s 27.9 percent holding and is negotiating a price of 5 dirhams to 6 dirhams a share, a person with knowledge of the matter said on July 15. Khadem Al Qubaisi, chairman of both Arabtec and Aabar, the builder’s second-biggest shareholder, said July 2 that the investment company may raise its stake.

“Investors weren’t very happy with the announcement and it took them by surprise,” Nayal Khan, head of institutional sales and trading at Naeem Holding brokerage in Dubai, said by telephone today. “Informing the market that he has rejected the offer wasn’t a very smart thing to do,” and won’t help Ismaik as the share price was still below the offer price, Khan said.

With about 150 million shares traded, Arabtec was the most active stock on the Dubai gauge, which declined 1.2 percent to 4,928.22, the most in more than three weeks.

Ismaik’s resignation from Arabtec in June and the subsequent dismissal of top managers threw into doubt an expansion plan that saw the shares quadruple in value during the former CEO’s 15 months in charge. Concern that the company was losing state support also contributed to a decline of more than 60 percent in the share price in June. The drop helped drag down Dubai’s bourse 22 percent in the same period.

“With management changes, it was expected that the uncertainty surrounding Arabtec would go away, but it hasn’t,” Sebastien Henin, who oversees $90 million as head of asset management at the National Investor in Abu Dhabi, said today by telephone,-Bloomberg