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Germany’s two largest listed residential homeowners, Vonovia and Deutsche Wohnen, are to be combined into a € 18 billion cash deal that will create a company with more than 500,000 flats in Germany and properties in Sweden and Austria.
Vonovia offers Deutsche Wohnen shareholders € 53 in cash per share, including an expected dividend of € 1, which is a 25% premium over the average share price for the last three months.
The deal will give shareholders “long-term strategic benefits,” Jefferies real estate analyst Thomas Rothaeusler said in a note to clients.
The deal, announced Monday night, is a rare combination of two Dax-listed companies following the failed takeover of Dresdner Bank by Allianz and Bayer’s acquisition of pharmaceutical group Schering two decades ago.
The agreement is expected to generate 105 million euros in cost synergies “from joint management and complementary portfolios regionally,” Vonovia said. The expanded company said it would not reduce its workforce before the end of next year.
“Now is the right time to combine the proven performance and strengths of both companies,” said Michael Zahn, chief executive of Deutsche Wohnen, which struggled five years ago with a hostile offer of Vonovia cash and shares.
Both Zahn and Deutsche Wohnen chief financial officer Philip Grosse will join the executive board of the expanded board.
Vonovia and Deutsche Wohnen are willing to sell a significant number of residential units in the state of Berlin as part of a proposed “pact” with regional politicians to help the real estate market in Berlin.
Vonovia CEO Rolf Buch, who has been in a long-term acquisition, said the deal “gives us the opportunity to effectively address” the challenge of increasing the supply of affordable and suitable apartments for the elderly and to renovate houses to make them greener.
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