UAE-based Arkan Building Materials Company (Arkan) has announced that it has won approval from its shareholders for its strategic merger with Emirates Steel Industries, the Middle East’s leading integrated steel manufacturer.

A leading construction and building materials company in the UAE, Arkan said the transaction will create a listed national champion in the building materials and construction sector with strong potential for growth in the UAE and internationally.

Emirates Steel is owned by General Holding Corporation (Senaat), a part of ADQ, one of the region’s largest holding companies.

The key terms of the strategic combination, proposed in May by Senaat, are to transfer Emirates Steel to Arkan in consideration for the issuance by Arkan to Senaat of a convertible instrument.

Upon closing the transaction, the convertible instrument would automatically convert into 5.1 billion ordinary shares in Arkan at a fixed price of AED 0.798 per share. Following the conversion, Senaat would own 87.5 per cent of the entire issued share capital of Arkan.

Lauding the shareholders’ move, Chairman Engineer Jamal Salem Al Dhaheri said: “The transaction will offer investors access to a national and regional champion in the building materials and construction sector, that is well placed for opportunities that emerge from the economic recovery that lies ahead.”

According to him, the combined group will benefit from a strengthened balance sheet and operational scale.

“In particular, it will play a key role in supporting the sustainable economic growth targets outlined in the UAE’s Industrial Strategy ‘Operation 300 Billon’, ” he stated.

The transaction is expected to close later this year, until then, both companies will continue to operate independently, it added.