ADQ’s Senaat to Merge NPCC with NMDC in UAE

ADQ’s Senaat to Merge NPCC with NMDC in UAE

General Holding Corporation PJSC (Senaat) and other minority shareholders of National Petroleum Construction Company PJSC (NPCC), a world class Engineering, Procurement and Construction Company that provides solutions to the Offshore and Onshore Oil & Gas sector, confirms that it has submitted an offer to the Board of National Marine Dredging Company PJSC (NMDC), a regional leader in dredging and marine construction, to combine NPCC with NMDC. The offer sets out the principal terms and conditions by which Senaat, a part of ADQ, one of the region’s largest holding companies, and other minority shareholders of NPCC would transfer NPCC to NMDC.

The proposed transaction would create a new national and regional integrated EPC champion with an established footprint in key markets within MENA and South Asia. The combined group would be one of the largest integrated oil & gas and marine services EPC players in the MENA region with integrated 2019A revenue of AED 8.875 billion.

The businesses are complementary, and the transaction would provide significant revenue diversification for the combined group. Through an active diversified strategy across its product segment, client base and geography, the combined group will become increasingly resilient to market cycles. It is the intention to maintain NMDC’s existing listing, positioning the combined group as one of the largest companies on the Abu Dhabi Securities Exchange (ADX), which is expected to have a positive impact on overall demand and liquidity for the combined group’s shares.

The proposed transaction offers further value accretive elements to the combined group, including cost synergies as a result of economies of scale and scope as well as access to more bids.

Senaat and other minority shareholders of NPCC are proposing to transfer the entire issued share capital of NPCC to NMDC. In consideration for the issued share capital transfer, NMDC would issue to Senaat and other minority shareholders of NPCC a convertible instrument, convertible into 575,000,000 ordinary shares in the combined group upon closing of the transaction. The price at which the convertible instrument will convert into shares in MDC is AED 4.40 per share. The offer implies an equity value of NMDC of AED 1.1 billion.

By creating a single platform, the combined group is ideally positioned to capture growth opportunities in the UAE and in key regional markets, with strong capabilities across the value chain to support future expansion plans. The combination will also unlock value to shareholders by creating a vehicle with significant dividend payment potential in the long term as a result of its diversification, economies of scale and synergies.

H.E. Khalifa Sultan Al Suwaidi, Chief Investment Officer at ADQ and Chairman of Senaat, commented:

“As one of the largest pan-regional EPC players, this transaction will create a larger, more diversified and financially flexible national champion. By bringing together two highly complementary businesses, we will be able to successfully drive increased growth while showcasing the very best of Abu Dhabi and its industry-leading capabilities on the global stage. We are excited about the significant opportunity that can be created via this transaction, driving performance and growth to generate value not only for shareholders, but the UAE as a whole. Subject to completion of the transaction, ADQ and Senaat will also consider increasing the free float of the combined group through a follow-on public offering at a later date.”

If NMDC’s Board recommend the offer, and its shareholders vote in favour, then the transaction could close towards the end of 2020, subject to the receipt of all required regulatory approvals.

Moelis & Company is acting as financial advisor to ADQ, while Allen & Overy LLP are acting as its legal advisor.

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