Dubai property companies merger called off

The merger between Dubai Holding, one of the emirates’ biggest holding companies and Emaar Properties, developer of the world’s tallest skyscraper, has been called off.

In another blow to the beleaguered emirate which is still reeling from the revelation of the extensive debts of both Dubai World and its subsidiary developer Nakheel and raises fresh questions about the government’s strategy for dealing with its severe financial problems.

Dubai Holding and Emaar released few details about why executives were calling off the planned merger.
A brief statement said it was ‘not economically viable for now’. Emaar is partly government owned and listed on Dubai's main stock exchange.
Dubai Holding is owned by Dubai's ruler, Sheikh Mohammed bin Rashid Al Maktoum.
 
The merger between Emaar and three of Dubai Holdings real estate units – Dubai Properties, Sama Dubai and Tatweer – was announced in June and described as a move to consolidate the entities in the face of the global economic downturn which was having a severe impact on the emirate’s property market.

Just a couple of weeks ago the companies confirmed that the plans would be complete soon.
But once again there has been admission from leading players in the Dubai economy that all is not well.

Further evidence of the effect of the Dubai debt problem is continuing to emerge.
Moody's Investors Service said it had placed the debt of government related entities in oil rich neighbour Abu Dhabi on review for possible downgrade.

Abu Dhabi is the biggest and richest of the seven emirates that make up the United Arab Emirates, and it serves as the federation's capital.
Unlike Dubai, Abu Dhabi is one of the world's largest oil producers.

Moody's, however, said that after Dubai World's debt restructuring, it now needed to ‘revalidate, and possibly reconsider’ assumptions of government support in Abu Dhabi as well as Dubai.

Negotiations between Dubai World and its creditors continue. It is seeking a six month stay on paying its debts.
About 100 bank creditors are due to meet with Dubai World officials on December 21 for talks to restructure debt.

Further financial problems with Dubai based companies are expected to trickle out.
Yesterday WYG, the consultancy firm that provides development control services for Nakheel’s Dubai Waterfront development, announced plans to restructure its finances to avoid insolvency.