Dubai-based Arabtec confirmed on Saturday that Abu Dhabi's Aabar Investments is looking to finalize a deal on January 13 to acquire a 70 percent stake in the company for $1.7 billion.

Aabar said on Friday it intended to buy the stake through convertible bonds, which would provide both cash and potential new contracts for the Dubai construction giant.

Aabar Investments PJSC and Dubai's Arabtec Holdings PJSC have agreed for Aabar to acquire 70 percent of the shares in Arabtec by way of a convertible mandatory bond..., Arabtec said in an emailed statement.

Formal discussions between the firms began January 4, the company said. Finalizing the deal depends on completing legal diligence by January 13, the approval of Arabtec's shareholders and obtaining regulatory approvals, it added.

Arabtec said the acquisition will further consolidate its position in the market.

Credit Suisse, which has a target price of 3.33 dirhams for shares of Arabtec, said in a note that Aabar would give a welcome cash injection to Arabtec through the deal, and could help provide new contracts for it in Abu Dhabi.

Aabar, the non-energy investment arm of Abu Dhabi sovereign wealth fund IPIC, is German carmaker Daimler's largest shareholder.

There had been market rumors since late December regarding a possible investment by Aabar in Arabtec but both firms had denied there had been any deal.

Arabtec -- which has ventured into new markets such as Russia, Qatar and Saudi Arabia as the global downturn hit business at home in Dubai -- has said it will turn its main focus to other locations including Abu Dhabi where it won contracts last year.

The real estate and construction focus in the United Arab Emirates has been shifting to Abu Dhabi from Dubai and the latter emirate's debt crisis may intensify the move.

The crisis, sparked by Dubai's November 25 request to delay repayment on $26 billion in debt for six months, is expected to delay the recovery for the UAE's real estate sector.

In mid-December Abu Dhabi lent Dubai $10 billion to meet debt obligations and stave off a bond default by state-linked developer Nakheel.

(Reporting by Tamara Walid; Editing by Andy Bruce)