Emaar Properties has offered 15 dirhams a share in cash for the part of Emaar Development it does not already own, a bid worth about 11.9 billion dirhams ($3.2 billion) that would let Dubai's largest developer delist its UAE homebuilding arm, as group third-quarter profit rose 5.6% to 4.6 billion dirhams.

The offer, which opened on Nov. 6, is 19.4% above Emaar Development's closing price of 12.56 dirhams on Nov. 2, the last trading day before the board's announcement, according to Emaar's offer page. For investors in Asia, many of whom track Dubai through its bellwether property stocks and Gulf-focused funds, the deal would take a listed homebuilder off the Dubai Financial Market and fold its earnings back into the parent at a time when Dubai home sales are slowing.

Emaar Development offer terms and timetable

Emaar and its wholly owned subsidiary Emirates Property Holdings Limited hold 80.16% of Emaar Development, Khaleej Times reported, leaving about 19.84% in other hands. The National put the remaining stake at 793.5 million shares, citing the filing. Emaar said it has sufficient resources to pay the full cash consideration, according to Khaleej Times.

The offer has no minimum acceptance level, and Emaar will buy all shares tendered once its conditions are met or waived, even if it ends up short of 90%, Khaleej Times reported. If acceptances reach 90%, Emaar plans to buy the rest at the same price, convert Emaar Development into a private joint stock company and delist it from the DFM.

The market has moved most of the way to the bid. Emaar Development closed at 14.52 dirhams on Nov. 5, about 0.4% lower on the day, The National reported, leaving a 3.3% gap to the offer price. The bid is 148.8% above the 6.03 dirham subscription price at the unit's November 2017 listing, Emaar said.

The offer closes at 3 p.m. UAE time on Dec. 10 unless extended, with results due Dec. 11. Emaar expects the offer to become unconditional on or around Jan. 8, 2027, with payment within three business days after that. Emaar Properties said in its filing that it was acting on "strategic considerations," and that the deal would let it run domestic development as one business under a single capital allocation framework, according to The National.

Emaar profit rises on backlog as hotels weaken

Third-quarter revenue rose nearly 3% from a year earlier to 13.6 billion dirhams, The National reported. For the first nine months, revenue climbed 13% to 37.5 billion dirhams and net profit before tax rose 18% to 19.8 billion dirhams, Emaar said in its results release. Property sales for the period totaled 34.7 billion dirhams across 14 new project launches.

Emaar's revenue backlog, the sales it has booked but not yet recognized as revenue, stood at 158.8 billion dirhams at the end of September, up 6% from a year earlier. Founder Mohamed Alabbar said, "Our nine-month results reflect the work happening across Emaar."

Emaar Development, the target of the offer, reported third-quarter profit up nearly 8% to 3.5 billion dirhams on revenue up 14% to 8.8 billion dirhams, according to The National. For the nine months, the unit's revenue rose 26% to 22.2 billion dirhams and profit before tax rose 28% to 12.5 billion dirhams, on UAE property sales of 26.2 billion dirhams. Its UAE revenue backlog was 127.2 billion dirhams.

Not every business grew. Average occupancy at Emaar's UAE hotels fell to 63% in the first nine months from 80% a year earlier, which the company linked partly to fewer international visitors to the region. Revenue from hospitality, leisure and entertainment was 2.4 billion dirhams. Malls and commercial leasing held up better, with revenue up 10% to 5.2 billion dirhams and occupancy of about 98%. The release said global economic and geopolitical conditions "remained uncertain."

Dubai home sales slow as Emaar pays out cash

The wider Dubai market is cooling. Home sales in the city fell 47% from a year earlier to 72.6 billion dirhams in the third quarter, and the number of transactions dropped 38% to 34,000, according to Cavendish Maxwell data cited by The National, which tied the slowdown to buyer caution over regional uncertainty linked to the Iran war.

Emaar is still returning cash to its own shareholders. The board approved a one-time special dividend of 4.4 billion dirhams, or 0.5 dirhams a share, on top of the regular annual payout. Emaar Development also awarded 23 main construction contracts worth 13.5 billion dirhams in the first nine months, Emaar said, and the group handed over more than 4,800 homes in the UAE.

The buyout comes as Dubai's equity market tries to rebuild its new-issue pipeline: DIP Holding priced its Dubai IPO at 1.12 dirhams a share ahead of its Nov. 11 debut. Emaar Development shareholders have until Dec. 10 to decide whether to accept the 15 dirhams on offer.