Wall St. WTF: Aabar gets a take-under. Shareholders get under-taker.

Aabar which earlier in the year had attempted to execute a take-under of Arabtec the Dubai based construction firm at a discount to the prevailing price has done itself one better, it is taking itself private 1.45 AED per share. That’s down about 15% from the pre-delisting announcement and about 25% below the high for the past year. Those guys over at Aabar are some smart folks. Not only do they get to take their company private so there won’t be any more of these pesky disclosures as to what the investment arm of IPIC is doing but the valuation they are granting themselves is also 50% of book value. Nice trade.

Most of what I have read in the press makes no sense. There was something about how the shareholders though they might get taken out at the conversion price implied by the bonds that were issued in May. There is NO reason to think that, the conversion price in a mandatory convert is not designed to give a valuation but to imply upside. There has been some talk of ESCA demanding an independent valuation. That would shock me because clearly the IPIC guys have more power than the ESCA guys and whoever was hired to do the “independent valuation” would have a lot to gain from future business from IPIC and little to gain from the gratitude of the minority shareholders.

So what do the minority shareholders have to say about this? We’ll never know. Aabar asked ESCA to allow it to delay the meeting to discuss the delisting to August 8th, from July 27th. ESCA granted the request the same day. Given that the offer expires on August 1st the offer will have ended by the time the meeting is held. Well done Aabar, no need to discuss the merits of the offer at the meeting because anyone who takes it will of course no longer be a shareholder and therefore won’t be there. Aabar may well be addressing an empty room, quiet (rightly) as a tomb. Aabar has once again made an “O plato, o plomo” (lead or silver) offer, this time to its’ own shareholders.