Revolution underway in the German real estate market. Deutsche Annington Immobilien Gruppe, the leading group in the sector in Germany, has announced that it has reached an agreement to buy German living, another large real estate group for a record amount, equal to 18 billion euros.
Going into the details of the agreement, Vonovia will pay € 52 per share and Deutsche Wohnen shareholders will retain the rights to a dividend of €1,03 per share. The figure corresponds to a premium of around 18% on Friday's closing price. Deutsche Wohnen, whose buildings are mostly located in Berlin, said he did support the offer.
The CEO of Vonovia, which operates in German, Austrian and Swedish cities, cited the need to make apartments more energy efficient and more age-friendly. “Combining with Deutsche Wohnen now gives us the opportunity to effectively address these challenges,” said Rolf Buch, CEO.
According to Jefferies analysts, the acquisition "makes sense in strategic terms", despite the low synergies.
Reuters reports that, in an effort to secure backing for the merger in the German capital, where housing rights and rising rental costs have become a thorny issue, the two companies have promised to limit increases regular rent adjustments in Berlin at 1% a year for the next three years and to increase the corrections in the immediately following two years, among other concessions.
It should be emphasized that it is not the first time that Vonovia has attempted to find an agreement to acquire Deutsche Wohnen, indeed a previous attempt which took place in 2016 had not obtained the necessary approval from the shareholders of Deutsche Wohnen, due to a hostile offer from 9,9, XNUMX billion euros. “I'm sure, very sure that many shareholders will take up this offerDeutsche Wohnen Chief Executive Officer Michael Zahn said on a conference call this morning, Handelsblatt reports.
The agreement between the two big German real estate is having repercussions on the stock market as well. This morning the Dax reached a new all-time high of 15.568 points and in the afternoon the index gained 0,6% to 15537 points, achieving the best performance at European level. Meanwhile, as per tradition, investors sell who buys and bet on who "gets bought". In fact, the Vonovia share lost 4,17% to 49,93 euros, while the shares of Deutsche Wohnen gained more than 16%, exceeding the offer price.
