Vonovia Launches Offer for Rival German Landlord Deutsche Wohnen

(Bloomberg) -- Vonovia SE formally launched its takeover offer for rival Deutsche Wohnen SE in a deal that could see Germany’s two largest residential landlords combine into an entity controlling more than 500,000 apartments.

Under the deal, Vonovia is offering 52 euros ($62) in cash for each Deutsche Wohnen share, Vonovia said in a statement Wednesday. The offer represents a premium of 15.6% on the closing price of Deutsche Wohnen on May 21, the last day of trading before the offer was announced, Vonovia said.

Including a dividend payment, the value of the deal -- which is backed by Deutsche Wohnen’s management and supervisory boards -- amounts to about 19 billion euros.

The offer period begins today and is expected to end on July 21. The transaction is contingent on a minimum acceptance of more than 50%.

Vonovia has already increased its total voting rights in Deutsche Wohnen to about 22% in the last few weeks, regulatory filings show. Billionaire Paul E. Singer, who runs New York-based activist investor Elliott Management Corp., has taken a stake of just over 3% in Deutsche Wohnen, crossing the threshold on June 1, according to a filing.

Some analysts including Thomas Rothaeusler at Jefferies have questioned the timing of the bid given uncertainty around the German national election in September, in which affordable housing is on the agenda. Deutsche Wohnen has long been the main target of protesters angry about what they see as the influence of large property owners and excessive rents.

Vonovia’s offer includes concessions to the city of Berlin where Deutsche Wohnen has a strong presence. Vonovia plans to offer to sell about 20,000 apartments to the Berlin government, build some 13,000 new units and limit rent increases to ease public concerns.

It is the third time Vonovia has attempted to acquire Deutsche Wohnen. A previous bid failed in February 2016 after the company couldn’t win enough support from investors in Deutsche Wohnen.

The companies decided to pursue the transaction after a mid-April decision by the German constitutional court to overturn a controversial rent freeze in Berlin as the ruling provided some clarity for the property market.

©2021 Bloomberg L.P.