The lettering “Deutsche Wohnen” is emblazoned on the facade of the headquarters of the listed housing company Deutsche Wohnen SE in Berlin. Vonovia has now secured a majority in the company. Photo: Christoph Soeder / dpa +++ dpa-Bildfunk +++
(Photo: dpa)
Frankfurt The Bochum real estate group Vonovia has secured a majority in rival Deutsche Wohnen. Vonovia announced on Monday that the total number of Deutsche Wohnen shares that were offered to the Bochum industry leader or to which he has access amounted to around 50.49 percent of the voting rights of the Berlin competitor on Friday evening. The Dax group thus finally secured control of the second largest German real estate company.
Vonovia boss Rolf Buch is on target for the third time in taking over Germany’s largest competitor. To prevent another failure, Vonovia had thrown overboard the minimum acceptance threshold of its around 19 billion euros purchase offer for its smaller rival a good week ago.
The first deadline for the current takeover offer ends on October 4th at midnight. Vonovia is offering EUR 53 per share in Deutsche Wohnen and most recently secured access to potentially additional shares in Deutsche Wohnen by removing the minimum acceptance threshold.
Dispute with hedge funds
But the approach of the two groups has met with clear criticism from investors in the past few days. The London hedge fund Davidson Kempner is even taking legal action against Deutsche Wohnen. The fund, which according to its own information has a 3.2 percent stake in the takeover target of Deutsche Wohnen, wants to forbid its board of directors from providing the merger partner Vonovia with a further six percent of Deutsche Wohnen shares. The hedge fund warned of undermining shareholder democracy.
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The Berlin Dax group rejected the allegations as unfounded and announced that it would take legal action.
The board of directors of Deutscher Wohnen had already sold Vonovia 3.5 percent of the shares from the company’s own holdings and promised a further 0.9 percent. Vonovia can also subscribe to a capital increase of 5.2 percent to increase its stake. The merger partners are undermining the strategy of hedge funds to buy into companies that are about to be acquired in order to drive up the purchase price.
The takeover creates Europe’s leading real estate group. The two giants listed in the leading index Dax together own around 570,000 apartments valued at more than 80 billion euros, most of them in Germany. The Federal Cartel Office had already approved the plans. Together, the two companies now want to become the largest private developer of apartments in Germany.
The decision of the citizens of Berlin to let the Senate examine the expropriation of large landlords, however, puts the new giant under pressure. According to preliminary figures, in a referendum on Sunday, 56 percent of the people in Berlin asked the Senate to initiate all measures that are necessary for the transfer of real estate to common ownership. Vonovia and Deutsche Wohnen would be particularly hard hit, as they are among the largest landlords in Berlin. However, the new Berlin Senate is not obliged to follow the referendum vote.
Agreement with Deutsche Wohnen management makes the difference
Vonovia boss Buch had already failed twice with the takeover of the previous competitor. He had already ridden a first attack on Deutsche Wohnen in 2016, at that time against their will and without success. At the second attempt this year, he was able to get the Berlin company’s executive board and supervisory board on board, but not all of the shareholders involved in Deutsche Wohnen. They offered too few shares, Vonovia was only able to secure around 47.6 percent – which meant that this attempt at first came to nothing.
The Bochum Dax group then increased its offer by one euro to 53 euros, but maintained the minimum acceptance threshold, but canceled it a good week ago. Since then, the deal has not failed due to the conditions.
The future company will be called Vonovia SE. The headquarters are to remain in Bochum, but the company will be managed from Bochum and Berlin. It was also agreed that in connection with the transaction no redundancies will be issued until January 1, 2024. In addition, Deutsche Wohnen boss Michael Zahn and his CFO should move up to the board of the new group.
Vonovia had grown strongly through acquisitions under Real Estate Manager Buch in recent years. He wants to continue on this course with the takeover of Deutsche Wohnen. The deal is particularly controversial in Berlin, where Deutsche Wohnen owns around 114,000 apartments. In order to appease critics, Buch and Zahn had, among other things, announced a limit on regular rent increases in Berlin until 2026 and sold almost 15,000 apartments in Berlin to the city’s public housing company.
More: Vonovia removes the acceptance threshold – nothing stands in the way of the takeover of Deutscher Wohnen