Dubai fund offers to buy Spanish realtor Colonial for $4.5 billion

Mumbai:  Investment Corporation of Dubai, the investment arm of the Dubai government, has offered to acquire ailing Spanish realty firm Inmobiliaria Colonial SA for about 3 billion euros ($4.5 billion) in cash and securities.

The Dubai investment firm offered 1.85 euros a share for Colonial, a statement issued by the company said. The offer is at an 8.8 per cent premium to Colonial's closing price on Tuesday. Colonial, which lost half its market value in six months after a slowdown in the Spanish property market caused shares of developers to slump, attracted three suitors. Colonial has 12 billion euros in assets, including offices and malls in Madrid, Barcelona and Paris. Colonial also owns a 15 per cent stake in Fomento de Construcciones & Contratas SA, Spain's third-largest construction company.

The Dubai fund said it will pay cash equivalent to 1.85 euros a share and 50 per cent of the bid in securities valued at 2.25 euros a share, provided the securities are held until maturity.

The Spanish developer's largest investors – Nozar SA and former Colonial chairman Luis Portillo who own 51 per cent of the stock between them – have agreed to sell their stakes to the Dubai fund in the event of a formal offer.

Grupo Inmocaral bought Colonial for 3.76 billion euros last year and then adopted its name. Since then, Colonial has purchased mall developer Riofisa SA for 2 billion euros. 

Investment Corporation of Dubai, with assets of about $82 billion, manages Dubai government's holdings in companies including Emirates, the biggest Arab airline, and Emirates NBD PJSC, the Gulf's biggest bank. The fund has also invested in hotels and other real estate in London and New York.