Germany’s Vonovia to buy Deutsche Wohnen for $ 23 billion
German residential real estate company Vonovia SE has agreed to acquire its rival Deutsche Wohnen SE for around 19 billion euros ($ 23 billion) in the biggest takeover ever in European real estate.
Vonovia will offer € 53.03 per share in cash for every Deutsche Wohnen share, including a proposed dividend, the companies said in a statement Monday, confirming a previous Bloomberg News report. The offer represents a premium of around 18% over Deutsche Wohnen’s Friday closing price.
The deal with Deutsche Wohnen is the biggest European takeover of the year, according to data compiled by Bloomberg. It would reshape the country’s real estate industry, bringing together the two largest residential owners with control of more than 500,000 apartments.
German real estate companies have faced increasing public pressure in recent years due to high prices, especially in the nation’s capital. Deutsche Wohnen faced brief respite after German Constitutional Court ruling in mid-April cancel a controversial rent freeze in Berlin, where the company’s apartments are located.
As part of the deal, Vonovia and Deutsche Wohnen are offering the state of Berlin the option of purchasing “a significant number” of residential units from businesses, the statement said.
Vonovia expects a rights issue of up to 8 billion euros after the closing of the transaction, scheduled for the second half of the year. The companies anticipate 105 million euros in cost savings per year thanks to the joint management of their portfolios.
The latest move marks the third time that Vonovia has attempted to acquire Deutsche Wohnen. A previous attempt failed in February 2016 after Vonovia could not gain enough support from investors at Deutsche Wohnen. Deutsche Wohnen called the offer hostile and not in the best interests of shareholders.
Vonovia brought in advisers early last year to re-examine the feasibility of a deal, Bloomberg News reported at the time. In the end, he decided not to go ahead with an offer.
The deal shows that Vonovia CEO Rolf Buch was finally able to convince his Deutsche Wohnen counterpart, Michael Zahn, after the two clashed over the prize in the failed chase some five years ago. Buch made Bochum-based Vonovia a heavyweight in European real estate through several acquisitions, including that of 2019 purchase from a Swedish owner Hembla AB and a 2016 agreement for Austrian developer Conwert Immobilien Invest SE.
Zahn and Deutsche Wohnen chief financial officer Philip Grosse are expected to be appointed to Vonovia’s board after the acquisition, the companies said.
– With the help of Manuel Baigorri
(Adds details of the agreement from the fifth paragraph.)