German Property Deal Heats Up With New Bid Near $23 Billion
(Bloomberg) -- Vonovia SE nudged up its offer for rival German real estate company Deutsche Wohnen SE to about 19.1 billion euros ($22.7 billion), sweetening an attempt to woo shareholders after last month’s bid narrowly failed.
Pending approval from German financial regulator BaFin, Vonovia said Sunday in a statement it agreed to pay 53 euros cash for each Deutsche Wohnen share after failing to secure a deal at 52 euros last month. Deutsche Wohnen shares closed at 52.64 euros on Friday, suggesting investors were expecting an improved offer.
The company’s shares rose as much as 0.4% to 52.86 euros in Frankfurt trading on Monday morning, while Vonovia added as much as 1.3% to 56.90 euros.
Vonovia is betting that the addition of 1 euro per share will finally sway enough investors after it missed out on getting to the 50% threshold. It is also getting additional support from Bank of America Corp. to help secure the deal.
“As well as Morgan Stanley, we have now also brought Bank of America on board in order to better address the shareholders of Deutsche Wohnen,” Vonovia CEO Rolf Buch said in an interview Monday. He said that Vonovia may have been “too confident” that the takeover would succeed last time.
The deal, potentially the biggest-ever in European real estate, would combine Germany’s two largest residential landlords into an entity controlling more than 500,000 apartments and further consolidate the power of large property owners. Almost three-quarters of the target’s properties are in Berlin.
“A combination with Vonovia in partnership still makes strategic sense and offers significant benefits,” Michael Zahn, chief executive officer of Deutsche Wohnen, said in a statement Sunday.
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German landlords have faced intense public pressure over the past few years over rising prices, particularly in the nation’s capital. Deutsche Wohnen has been the main target of activists after buying a large amount of social housing that was put up for sale by the city to pay down public debt after the Berlin Wall fell.
In its statement, Deutsche Wohnen said the offer to the State of Berlin to acquire a significant number of apartments remains unchanged, and discussions with the city will continue.
The latest takeover offer requires exemption from a one-year blocking period from BaFin. “I believe that Bafin will give us the green light relatively quickly to submit a new offer,” Vonovia’s Buch said Monday.
What Bloomberg Intelligence says:
“The improved bid hints at both landlords’ confidence of the deal’s chances of success after talks with major shareholders, especially after the initial offer only marginally missed the 50% acceptance threshold.”
--Iwona Hovenko, EMEA real estate
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