By Adam Schreck / AP
DUBAI: Damas International, a prominent Mideast jeweler involved in a multimillion-dollar bookkeeping scandal, agreed Wednesday to be taken over in a deal that values it at $445 million.
A consortium led by Qatari conglomerate Mannai Corp. said Damas’ board has accepted the bid of 45 cents a share. The deal appears all but certain to go through because the bidders have already secured binding commitments from more than three-quarters of Damas shareholders.
The purchase price represents a 45 percent premium over Damas’ share price before Mannai confirmed its interest in January.
Under the terms of the deal, Mannai will hold a controlling stake of 66 percent in Damas. Its takeover partner, EFG Hermes, Egypt’s biggest investment bank, will get a 19 percent share.
In 2009, Damas ousted then-CEO Tawhid Abdullah — a grandson of the company’s founder — after he made what the company described as “unauthorized transactions” worth as much as $165 million. At the time, his brother Tawfique served as chairman of the company’s board, which also included a third brother, Tamjid.
The three brothers were later penalized by a stock market watchdog in Dubai for a series of improper financial dealings involving more than two tons of gold and nearly $100 million in cash. They signed a pact with lenders last year laying out repayment terms for at least some of the missing funds.
In the wake of the scandal, the company was forced to seek new repayment terms with lenders on $872 million in debt.
Mannai’s takeover deal calls for the Abdullah brothers, who remain Damas shareholders, to hold a 15 percent stake in the company to satisfy their deal with creditors.
Mannai CEO Alekh Grewal said the jeweler remains an “attractive retail brand with a highly successful regional business” despite the negative publicity brought by the accounting scandal.
“Our bid to acquire Damas is testament to its sound business model and promising growth potential,” he said in a statement.
Damas traces its history to 1907, when the Abdullah brothers’ grandfather began working as a goldsmith in Syria. It operates nearly 300 stores selling jewelry and watches, mostly in the Arab world. It was one of the few family businesses that dominate commerce in the Gulf to sell shares to the public.
The deal is expected to close in the next two weeks.