Colonial left reeling as Dubai withdraws from takeover bid

The fate of Inmobiliaria Colonial was in the balance again on Thursday as the Investment Corporation of Dubai (ICD) said that it was withdrawing from its bid to buy the troubled Spanish property giant. 'We regret that, despite best efforts by all parties, no agreement could be found,' ICD CEO Mohammed al-Shaibani said in a statement issued on Thursday. Colonial's shares dropped as much as 30% following the announcement.

The news came less than a day after Colonial's board approved the takeover offer submitted last week by the Dubai sovereign wealth fund to the Spanish company's major shareholders Luis Portillo and Nozar. Portillo holds a 34% stake in the company and Nozar has a 12% interest.

The stumbling block was ICD's failure to reach agreement with Colonial's creditors by the 19 March deadline.

ICD's moves to take a controlling stake in Colonial have stalled on several occasions in recent weeks only to be revived later. There was some speculation on Thursday that the ICD might give creditors another week to consider their positions. ICD said in a statement to Spanish stock market regulator CNMW: ‘If there was a possibility, beyond the conditions set on 11 March, to reach an agreement with Colonial, ICD would consider such a possibility and would communicate it immediately’.

Last week, ICD brokered a deal with Colonial's shareholders to give the sovereign wealth fund a majority stake in the troubled Spanish property company. ICD said that it is acquiring a 50.4% stake in Colonial at EUR 1.19 per share in a deal that will see Colonial hiving off its land and development holdings in a separate company, called Newco. Colonial's existing shareholders will be issued new shares in Newco.

The deal was only to go ahead if Colonial's shareholders can reach an agreement with the property company's banks before 19 March. If the new bid is successful, ICD will be obliged under market rules to make bid for the remaining shares in Colonial.

Newco was estimated to have assets potentially worth EUR 2.1 bn and debt of just under EUR 1 bn. The deal valued the property rental business being acquired by ICD at EUR 1.9 bn. ICD's earlier bid valued Colonial as a whole at EUR 3 bn.