DAMAC Properties’ response to concerns over a potential conflict of interest in founder Hussain Sajwani’s takeover bid has failed to convince financial experts and minority shareholders, raising further questions about fairness and transparency.
The controversy follows Sajwani’s submission of an offer to acquire 100 percent of DAMAC’s issued and paid-up shares through his privately owned company, Maple Invest Co. Ltd.
In a disclosure filed with the Dubai Financial Market on Sunday, DAMAC announced the appointment of financial and legal advisors to oversee the acquisition process. However, investors and analysts argue that this step does not guarantee independence or adequately protect minority shareholders, particularly given Sajwani’s dominant position.
Sajwani already owns a 72.2 percent stake in DAMAC and also controls Maple Invest, the acquisition vehicle making the offer. Critics say this effectively allows the majority shareholder to set the terms and price at which minority investors are expected to sell.
The Offer
On June 9, Sajwani announced an offer to acquire DAMAC through Maple Invest in a deal valued at $595 million, based on a share price of AED 1.30, the closing price on the day before the offer was made.
Financial experts argue that DAMAC’s current actions appear to be procedural steps intended to legitimize an acquisition that is fundamentally unfavorable to small investors. While Sajwani officially resigned as CEO following the offer, critics note that he continues to drive the acquisition process at a time and valuation they believe work to his advantage.
Investor Criticism
Investor Asmaa Wafi told Forbes Middle East that the decline in DAMAC’s share price prior to the offer was not accidental, but rather the result of deliberate signaling by management.
Wafi pointed to repeated public statements by Sajwani that highlighted weak market conditions and pessimistic outlooks for the real estate sector, which she believes contributed to downward pressure on the stock price.
“Is it logical for a CEO to repeatedly emphasize negative expectations for his own company and sector?” Wafi said. “Companies usually highlight their strengths, not weaknesses. I believe these statements were intended to push the share price lower, enabling a buyout at the lowest possible level.”
She also questioned the independence of the advisors appointed by DAMAC, arguing that financial and legal advisors should be selected by the regulator, with fees paid by the company and no ties to management or the bidder. In her view, disclosing the advisors’ identities before the process is completed further undermines objectivity.
Minority Shareholder Concerns
Wafi stressed that the structure of the deal disadvantages minority shareholders, particularly long-term investors. She highlighted that some shareholders purchased DAMAC shares at prices as high as AED 2.79 in 2015.
“Why should a shareholder be forced to sell at AED 1.30 in 2021, effectively losing more than half the value of their investment, after holding the stock for years in what was once a growing and profitable industry?” she said. “The greatest benefit clearly goes to the bidder.”
As scrutiny intensifies, analysts and investors continue to call for stronger regulatory oversight to ensure fair treatment of minority shareholders and genuine independence in the evaluation of the proposed acquisition.
