(Bloomberg) — Arabtec Holding shares soared in Dubai after the company started talks to merge with Abu Dhabi-based Trojan Holding.
The stock advanced as much as 13%, the steepest intraday gain since July 2017, as Arabtec said the entities began a study to potentially combine their construction businesses and may merge after technical, financial and legal reviews. It didn’t provide further details.
The talks come as a property-market slowdown weighs on companies in the United Arab Emirates. Property prices in the UAE, the second-biggest Arab economy, have dropped about 27% since October 2014 amid excess supply and sluggish economic growth.
S&P Global Ratings expects prices in Dubai, the Middle East’s business hub, to fall by another 5% to 10% this year.
Arabtec’s first-half profit plunged 49% as contracts dried up. The company, controlled by Abu Dhabi’s Aabar Investments PJS, said last year it’s working with Moelis & Co. on restructuring debt.
Arabtec shares were up 11% at 12:51 p.m. local time, trimming their year-to-date decline to 6.8%. The stock has underperformed Dubai’s benchmark index, which is up 14% in 2019.
–With assistance from Filipe Pacheco.