Property sector updates
Sign up to myFT Daily Digest to be the first to know about Property sector news.
The €18bn takeover of German residential landlord Deutsche Wohnen by rival Vonovia has collapsed after the bidder narrowly missed the required level of support from shareholders.
Vonovia late on Friday afternoon announced 47.62 per cent of Deutsche Wohnen investors accepted the all-cash offer that was tabled in late May in an attempt to create a real estate juggernaut that owns 500,000 flats in Germany as well as property in Sweden and Austria.
The bid was subject to the approval of at least 50 per cent of the target’s shareholders. “This offer is dead in the water,” Vonovia’s chief executive Rolf Buch told the Financial Times. “This is a sad day for all of our stakeholders,” he said, adding that the transaction “did make sense” and was endorsed by Deutsche Wohnen as well as Berlin’s government.
It is the second time in five years that a merger of the two companies has been rejected by shareholders. Deutsche Wohnen investors turned down a hostile bid by Vonovia in 2016.
This time, Vonovia offered €52 in cash per Deutsche Wohnen’s share and received the target’s endorsement. This represents a premium of 22.6 per cent on the landlord’ undisturbed share price.
The combined company would have been by far the single largest landlord in Germany’s capital, where rising rents and a lack of available housing is one of the hottest political issues.
In an attempt to win political support for the transaction, the two companies had offered to sell 20,000 flats to Berlin’s regional government and build another 13,000 in the German capital.
Buch said he still believed the transaction was merited. “We will thoroughly evaluate our options,” he said. Vonovia already owns 18 per cent of Deutsche Wohnen’s shares and is the rival’s single largest shareholder. Buch said that a sale of the shares, another bid, or the purchase of additional shares were among the options.
A person familiar with the details told the FT that the deal was derailed by hedge funds, which recently built large positions in Deutsche Wohnen and did not tender their shares as they were speculating on a higher payout later on.
Deutsche Wohnen did not immediately respond to a request for comment.