Gulf Navigation's AED 3.2 Billion Acquisition Of Brooge Energy Approved Amid Shareholder Concerns

Shareholders of Gulf Navigation Holding PJSC have approved the company's AED 3.2 billion Acquisition of Brooge energy Limited , a NASDAQ-listed oil refining and storage firm. This strategic move aims to bolster Gulf Navigation's presence in the midstream oil and gas logistics sector. The approval was secured despite earlier reservations from minority shareholders regarding potential dilution of their holdings.

The acquisition entails a multifaceted financial arrangement. Gulf Navigation will issue 359 million new shares to BEL, significantly increasing its share capital by 320%. Additionally, the deal includes AED 2.3 billion in mandatory convertible bonds . To address minority shareholders' concerns, the transaction also allocates AED 460 million in cash and AED 500 million in MCBs to current shareholders, prioritising their interests.

The acquisition is part of Gulf Navigation's strategy to enhance growth and provide an integrated portfolio of logistical services related to oil, gas, and petrochemical products. Brooge, headquartered in Fujairah, UAE, specialises in the storage of crude oil, fuel oil, and refined products, with a capacity of one million cubic meters, enabling the storage of approximately 6.3 million barrels of oil.

However, the acquisition comes amid a backdrop of legal challenges for Brooge Energy. In December 2023, the U.S. Securities and Exchange Commission imposed a $5 million penalty on Brooge for allegedly inflating revenues. Subsequently, in December 2024, some investors filed a fraud complaint against Brooge's auditor, Ernst & Young, alleging failure to detect fabricated revenues in the company's reports for 2018, 2019, and 2020. These allegations have raised concerns about the financial integrity of Brooge Energy.

Despite these challenges, Gulf Navigation proceeded with the acquisition, emphasising the strategic benefits and potential for growth in the oil and gas logistics sector. The company's board had previously approved key terms related to the acquisition and capital increase, reflecting a commitment to expanding its service offerings and market presence.

The approval of this acquisition marks a significant milestone for Gulf Navigation as it seeks to diversify its operations and strengthen its position in the regional oil and gas industry. The company plans to integrate Brooge's assets and services to offer a more comprehensive suite of logistical solutions to its clients.

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