Investors plan takeover: Aareal Bank opens the door to potential buyers

Investors plan takeover
Aareal Bank opens the door to prospective buyers

Two investors want to take over more than 1.7 billion euros from Aareal Bank. This hailed the offer as an opportunity for more growth. By canceling the dividend, it shows investors where the journey should go.

The financial investors Centerbridge and Advent want to take over Aareal Bank. The management of the Wiesbaden real estate financier welcomed the offer worth around 1.74 billion euros. The offer is in the best interests of the company, said Aareal Bank boss Jochen Klösges, who has only recently started directing the fate of the institute. Investors are behind the bank’s strategy and will accelerate growth even further. “Contrary to the often expressed speculation, there will be no breakup,” said Klösges. Otherwise the management would “certainly not have signed the investor agreement.”

Aareal Bank 29.24

However, there was also criticism from among the shareholders. The move was well received on the stock market: The share included in the SDax index for small stocks rose at times by almost four percent. The investors’ offer of 29 euros per Aareal share corresponds to a premium of around 23 percent on the closing price on October 6 – the day before the takeover talks became known. The purchase offer provides for a minimum acceptance threshold of 70 percent. The offer documents are to be published in mid-December.

Withheld dividends should flow into growth

Aareal also announced that the proposal for a dividend of EUR 1.10 per share will be removed from the agenda of the extraordinary general meeting scheduled for December 9th. In order to finance the accelerated growth, the financial investors did not want to distribute any dividends in the coming years, said Klösges. They are also ready to provide additional equity should additional growth opportunities arise.

Advent and Centerbridge bring extensive experience in the areas of financial services, real estate, software and payment transactions, said Ranjan Sen, Managing Partner and Germany boss of Advent International. “We want to invest in the group in order to further develop the bank’s segments.” The transaction builds on the existing cooperation with Aareal subsidiary Aareon.

Sharp criticism from the major shareholder

For Aareal Bank, which is targeting an operating result of 100 million to 175 million euros for this year with currently more than 3,100 employees, Advent is not an unknown quantity: Only last year the institute brought the financial investor on board at its IT subsidiary Aareon. Advent acquired a 30 percent stake for around 260 million euros. With the software from the IT subsidiary, renters can, for example, manage real estate and rent payments.

Ben Langworthy, Senior Managing Director at Centerbridge said that with a stable shareholder base, Aareal Bank could better focus on its longer-term goals. However, not all shareholders agreed. The hedge fund Teleios Capital criticized the project. The supervisory board is trying again to take the simplest route to the detriment of the shareholders, explained its co-founder Adam Epstein.

“Aareal is not a Christmas present for the Supervisory Board to be given away.” Teleios will try to ensure that this initiates a structured sales process in the new year. Teleios and the activist major shareholder Petrus Advisers had previously called for the IT subsidiary Aereon to be sold. Petrus Advisers did not comment at first.

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