IPIC is ordered to raise its bid for Aabar by 34 per cent

Market regulator tells International Petroleum Investment Company to raise its Aabar Investments takeover offer by 50 fils per share.

The UAE's market regulator today told the International Petroleum Investment Company (IPIC) to raise its Dh1.45 per share takeover offer for Aabar Investments to Dh1.95 per share following a review of the deal. The new offer represents a 34 per cent increase on the previous one. Aabar shares opened at Dh1.55 on the Abu Dhabi Securities Exchange (ADX) today and closed up 8.3 per cent at Dh1.57. While trading volumes were high, some traders said they had difficulty buying Aabar shares following the announcement.

"Nobody wants to sell their shares," said Khaled AbdulRazzak, a regular trader on the floor of the ADX. "I didn't get a chance, the stock hit its ceiling before I got a chance to buy," he said as he walked out of the exchange. IPIC, which already owns about 70 per cent of Aabar, said last week that it would offer Dh1.45 per share to minority investors as part of its plan to take over company, although the shareholders were free to hold on to their stakes following the delisting. That price was judged by some as too low given that the company's shares had traded as high as Dh2.10 in recent months. The Dh1.45 offer also valued Aabar at less than half of its book value.

Following the initial offer, the Emirates Securities and Commodities Authority (SCA), which regulates local stock exchanges, convened a government committee with the Ministry of Economy and Abu Dhabi Department of Economic Development to evaluate the deal. The higher offer of Dh1.95 a share is a six-month average of Aabar share prices, the SCA said today. The new offer would commence on Tuesday and run through August 5, it said. Investors would be paid cash for their shares on August 10, it added.

"The SCA knows our interests as investors," said Hadi Saleh Mohammed, a trader who said he bought more than 100,000 Aabar shares last Wednesday. "They studied the offer and were not convinced that the stock is worth Dh1.45. The picture still has to reflect our interests as well." IPIC's planned takeover of Aabar is the first transaction of its kind in the UAE and one many observers expect it will set a precedent for how the SCA and other government bodies handle future mergers and takeovers. The intervention of the SCA and the higher offer was widely seen as a victory for minority shareholders who had previously complained they were not getting a fair shake in the buyout.

"Its a step in the right direction," said Sameh Hassan, the director of research at the investment bank Rasmala in Dubai. "This sets a precedent for the regulator, to handle these kinds of situations. It shows going forward there will be a clear process and co-ordination between the companies and the regulator. SCA is there for minority shareholders." [e-mail] [e-mail]