Emaar cancels merger with Dubai Holding

DUBAI: Dubai’s debt woes spread from the stock market to the corporate sector on Wednesday, with giant property developer Emaar cancelling plans to merge with state-owned Dubai Holding, describing the link-up as unfeasible.

‘The board of directors has decided on Wednesday not to go ahead with the plan to merge the company with Dubai Holding, which was announced a few months ago,’ a brief statement said.

‘Studies have proven that the plan to merge is economically unfeasible at the moment,’ added the statement, without saying why.

The statement was released a few hours after the Dubai stock market closed down once again, led by Emaar, whose shares tumbled by almost the maximum-allowed 10 per cent.

The decision by Emaar, developer of Burj Dubai, the world’s tallest building, appears to reflect ebbing investor confidence in the debt-ridden emirate.

Talks had been ongoing to link Emaar and three Dubai Holding property units Dubai Properties, Sama Dubai and Tatweer.

Emaar said in June it was expecting the move to be completed in about four months, boasting that the new entity would be ‘one of the largest real estate developers worldwide.’Tatweer is in charge of developing Dubailand, which was expected to be the Middle East’s equivalent of Disney World, near Orlando, Florida. But most of its projects remain vast deserts, and appear unlikely to ever be realised after Dubai was hit by financing problems triggered by the global economic crisis.

Dubai Properties was behind several projects, including the completed Jumeirah Beach Residence, a stretch of residential towers and hotels, whose promenade has become a tourist magnet.

But Emaar, of which the Dubai government holds a stake of about 30 per cent, appears to have shied away from state-owned entities as the government struggles to sort out the financial problems of its heavily indebted Dubai World conglomerate.

Stock markets in Dubai and Abu Dhabi continued to take the Dubai debt revelations badly.—AFP