Austrian Landlords Plot Breakup After Failed Takeover Plan

(Bloomberg) -- Rival Vienna landlords S Immo AG and Immofinanz AG may consider ending cross-ownership of each other after a failed bid to merge the two companies.

S Immo is looking to start negotiations with Immofinanz on a mutual divestment deal, its Chief Executive Officer Bruno Ettenauer said weeks after its shareholders thwarted Immofinanz’s attempt to take over the company.

He’s seeking an amicable outcome that would set the two real-estate investors on separate paths following a flurry of hostile statements that prompted a rare scolding from Austria’s mergers watchdog.

In response, Immofinanz said it was open to discussions with S Immo and was interested in the best possible solution for both companies, according to comments emailed to Bloomberg News.

“Both of us have to act in the interest of our shareholders, therefore I’m pretty convinced we will find a solution,” Ettenauer said Thursday in an interview. His company is offering its $307 million holding in Immofinanz, hoping its competitor will also unload its 26% stake in S Immo.

Years of unsuccessful attempts to merge the nation’s three largest landlords have left a tangled knot of cross ownership and acrimony in Austria’s capital. S Immo said it was selling its stake in CA Immobilien Anlagen AG this week, as a purchase tender by Starwood Capital Group approached its deadline.

CA Immo investors are awaiting results on Starwood’s offer, due on Friday, to see whether Barry Sternlicht’s property heavyweight can push its ownership above 50% in that company. The 37 euro ($43.72) a share offer has come under fire from some investors who say the deal undervalues the company.

Avoiding Mistakes

S Immo decided to sell its CA Immo stake in order to free up cash for other investments, Ettenauer said.

“We made our profit, and we decided not to speculate further,” he said, adding that Starwood’s large stake in CA Immo could hurt the stock’s liquidity.

S Immo shares led advances in Vienna on Friday, rising as much as 3.6% from the lowest in almost four months.

To spend the revenue, S Immo’s CEO is looking at eastern European markets ahead of Germany, where it’s focused on improving rent collection. Ettenauer said S Immo could cautiously deploy as much as a half billion euros in new investments, yet is wary of risks from the pandemic and the subsequent inflationary environment.

“If you hurry, you can make mistakes,” said the 30-year industry veteran and former head of CA Immo. Even for 500 million euros, the market is strong enough to provide assets with quality, he said.

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