Clifford Chance and A&O take lead on £8.4bn Middle East property deal

Clifford Chance and Allen & Overy (A&O) have advised on a state-backed merger between property companies Sorouh and Aldar One, to create Abu Dhabi’s largest real estate developer.

The move is intended to stabilise the real estate market in Abu Dhabi, which is yet to fully recover from the economic downturn. Aldar One has been given nearly $10bn in bailout funds by the emirate’s government since 2008. 

The combined assets of Sorouh and Aldar One are worth approximately AED47bn (£8.4bn), making the new entity UAE’s second largest real estate developer. The merger is intended to create a stronger and more diversified company, which will continue to deliver various projects for the government as part of the Abu Dhabi Vision 2030 programme. 

The deal took the form of a statutory all-share merger, which Mohammed Al-Shukairy, lead partner for Clifford Chance said is “groundbreaking in the UAE”.

The Clifford Chance team, led by Dubai corporate partner Al-Shukairy, advised Sorouh. He was assisted by corporate associate Sian Rowlands and real estate counsel Steven Henderson. The team also included a wider partner team including Guy Norman, Robin Abraham and Sandy Hall.

A&O advised Aldar One led by the firm’s Abu Dhabi office managing partner Ibrahim Mubaydeen.

The statutory merger structure involves dissolving one company, and transferring all its assets and liabilities to a surviving or new company, subject to shareholder and regulatory approvals and a creditor objection period.

“It’s effectively a share swap,” said Al-Shukairy. “This transaction paves the way for a more effective, and now a tried and tested, method of merging UAE-listed companies.” 

Background to this deal: 

Sorouh is a new client for Clifford Chance, won in a beauty parade in March 2012 against a number of firms, including other magic circle firms. 

Aldar, which was previously about 30 per cent owned by Abu Dhabi’s investment arm Mubadala, has been struggling since the onset of the financial crisis in 2008 when property prices in the Emirate dropping substantially. The Government has bought an array of assets from the developer in its two recent rescue packages, including Ferrari World theme part and Yas Marina F1 circuit.