Mega-merger move will lead to an entity with a market cap of Dh15b plus
Dubai: Two leading companies listed on the ADX – Bayanat and Yahsat – have decided to merge.
The proposed merger will ‘create an AI-powered space technology champion’ for the Middle East and North Africa, with an implied market cap of Dh15 billion plus ($4 billion). This is based on the entities’ closing share prices as of December 18 (the last day of trading prior to announcement of the merger).
This would make it one of the ‘most valuable publicly listed space companies in the world by market cap’, and with ‘additional potential for significant global growth and synergies’.
Bayanat will remain the legal entity post-merger.
“Growth will be driven by our access to high-growth markets via cutting-edge technologies and an increased base of local and global customers, in addition to strong financials that allow us to pursue more ambitious growth opportunities,” said Musabbeh Al Kaabi, Chairman of Yahsat.
On ADX, early trades after the announcement had the Yahsat stock up around 3 per cent, while Bayanat gained 5.71 per cent.
Share Holding In New Abu Dhabi Powerhouse
Bayanat and Yahsat shareholders will own 54% and 46% respectively in the combined entity. Institutional shareholders include the G42 conglomerate, the Abu Dhabi sovereign fund Mubadala, and the investment holding company IHC, which will own approximately 42%, 29% and 8%, respectively.
The merged entity will have greater scope in regional and international opportunities in geospatial and mobility solutions, and satellite communications.
Yahsat is into satellite solutions, and its entities include Thuraya. The Yahsat contract book runs into the billions of dirhams, with UAE Government as its principal client. It is currently working on two new satellite projects.
“With a strengthened financial position, enhanced AI-powered technological capabilities and a diversified product portfolio, the combination will also establish a platform for transformative technologies to enable space-based services with significant impact on societies and economies,” said a statement.
It’s all about AI power – and space
“This merger will unite two leading home-grown companies to create the MENA region’s first AI-powered space technology company,” said Tareq Al Hosani, Chairman of Bayanat, in a statement. (Bayanat, part of G42 conglomerate, had its ADX listing last year. It was also the first AI-focused UAE entity to seek a stock market listing.)
“Leveraging our complementary assets, capabilities and ambitions will allow us to expand across the space value chain and offer an unparalleled service to our combined customer base,” said Al Hosani. “Together, we will leverage our key synergies to reinforce our position as a key engine of growth and strategic solutions provider to the UAE government and its agencies, while expanding our reach to global customers.”
Incidentally, another ADX-listed entity presight is also part of the G42 portfolio.
Structuring the merger deal:
The proposed merger will be executed through a share swap, with Bayanat as the remaining legal entity.
Bayanat shareholders will own approximately 54% and Yahsat’s the remaining 46% in the combined entity.
Bayanat and Yahsat have each ‘obtained independent fairness opinions’ from Houlihan Lokey and FTI Capital Advisors (respectively).
Group 42 (G42), Mubadala Investment Company and International Holding Company (IHC) will own approximately 42%, 29% and 8% of the combined entity.
How the stocks have fared on ADX
“The merger cements UAE’s status both in the exploratory AI and space communications space creating an entity that will challenge global contenders,” said Sameer Lakhani, Managing Director of Global Capital Partners. “And with its financial backing serve as a leading player on the world stage.
“It will spark a spate of mergers by other companies as capital market activity heats up in 2024.”
The Bayanat stock is up more than 300 per cent since its IPO, even though it’s down nearly 30 per cent year-to-date. Yahsat has gained 6 per cent this year.
Sameer Lakhani
The writer is Managing Director of Global Capital Partners
