Monday, May 24, 2021
Real estate giant emerges
Vonovia and Deutsche Wohnen decide to merge
A major merger is looming in the German housing industry. Vonovia, number one among the listed housing companies in Germany with almost 400,000 apartments, and number two, Deutsche Wohnen, sign a merger agreement.
The largest German listed housing group Vonovia wants to merge with its smaller competitor Deutsche Wohnen. Vonovia announced that it was offering EUR 52 per Deutsche Wohnen share as part of a voluntary takeover offer. Together with Deutsche Wohnen’s dividend for the 2020 financial year of 1.03 per share, this corresponds to a value of 53.03 euros per Deutsche Wohnen share. The purchase price offered is therefore almost 19 billion euros.
The transaction should go through the stage by the end of August – if Vonovia collects at least 50 percent of Deutsche Wohnen shares and the cartel authorities approve. Deutsche Wohnen boss Michael Zahn supported the plans for a merger: “Now is the right moment to combine the proven performance and strengths of both companies.” The two companies also submitted new proposals for the tense Berlin housing market. Deutsche Wohnen in particular is active there.
Vonovia is worth almost twice as much as Deutsche Wohnen, which was able to increase by 3 percent, despite a price slide of 13 percent since the beginning of the year. Together, the two companies listed in the Dax have around 550,000 apartments worth more than 80 billion euros. The future company will be called Vonovia SE, as announced. The headquarters are to remain in Bochum, but the company will be managed from Bochum and Berlin. In addition, the parties have agreed that they will not issue any redundancies in connection with the transaction before January 2024.
According to an insider, Vonovia boss Rolf Buch was aiming for a friendly takeover this time after the first attempt failed five years ago by the shareholders of Deutsche Wohnen, but also by resistance from CEO Michael Zahn, according to the company. Buch also put out feelers in Berlin state politics. A large proportion of the more than 150,000 apartments owned by Deutsche Wohnen are located in the federal capital, 113,000 in the greater Berlin area alone. Vonovia owns around 43,000 units there.
The rent cap of the red-red-green coalition in Berlin was recently cashed by the Federal Constitutional Court. The landlords had run riot against the ceiling for rents. They warned that renovations would then no longer be worthwhile – for example for age-appropriate living or measures for lower energy consumption.
In view of the scarce and expensive takeover opportunities in Germany, Vonovia recently looked outside the country’s borders and entered the Scandinavian market. The group with more than 400,000 apartments is valued at 30 billion euros on the stock exchange. Vonovia would not have to fear antitrust concerns, as the vast majority of rental apartments in Germany are privately or publicly owned.