German residential property firm Vonovia SE has agreed to acquire rival Deutsche Wohnen SE for about 19 billion euros (US$23 billion) in the biggest-ever takeover in European real estate, a deal that risks further stoking tensions over affordable housing.
The takeover, the year’s biggest in Europe, would reshape Germany’s property industry. The country’s two largest residential landlords control more than 500,000 apartments and risk raising further concerns about the market power of big property owners.
German landlords have faced intense public pressure over the past few years over rising prices, particularly in Berlin. Activists in the nation’s capital have targeted Deutsche Wohnen in particular with a referendum that is seeking to force the city to buy out large apartment owners.
Amid concerns over housing and tensions over the companies’ large holdings in Berlin, the deal is an effort at a “new beginning,” Vonovia chief executive officer Rolf Buch said on a conference call yesterday.
He said that he would speak with Berlin Mayor Michael Mueller later in the day to discuss the deal.
The combined company plans to offer to sell about 20,000 apartments to the city, a presentation showed.
Under the deal, Vonovia would offer 53.03 euros per share in cash for each Deutsche Wohnen share, including a proposed dividend, the companies said in a statement late on Monday.
The bid represents about an 18 percent premium to Deutsche Wohnen’s closing price on Friday last week.
The stock jumped as much as 16 percent to 52.38 euros yesterday. Vonovia’s shares fell as much as 6.8 percent to 48.57 euros.
Vonovia is planning a rights issue of as much as 8 billion euros after the completion of the transaction, expected in the second half of the year. The companies anticipate 105 million euros in cost savings a year from the joint management of their portfolios.
Deutsche Wohnen chief executive officer Michael Zahn and chief financial officer Philip Grosse are expected to be named to Vonovia’s management board after the acquisition, the companies said.
A takeover of Deutsche Wohnen would mark the crowning achievement for serial dealmaker Buch. He built Bochum-based Vonovia into a European property heavyweight through several acquisitions, including the 2019 purchase of Swedish landlord Hembla AB and a 2016 deal for Austrian developer Conwert Immobilien Invest SE.
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