Deal to create $ 22 billion German real estate giant stumbles


An office building of German real estate group Deutsche Wohnen is pictured in Berlin, Germany on June 2, 2020. REUTERS / Fabrizio Bensch

  • Vonovia says she could miss the 50% threshold
  • Deadline for Deutsche Wohnen shareholders has passed
  • Vonovia says stocks are counted, expected result Monday

DUESSELDORF, July 23 (Reuters) – Europe’s biggest real estate acquisition could fail, at least for now, after Germany’s Vonovia (VNAn.DE) warned on Friday that it probably did not get the support of a sufficient number of shareholders in its target Deutsche Wohnen (DWNG.DE).

The deadline for Deutsche Wohnen shareholders to offer shares has passed at midnight on Wednesday and Vonovia must collect at least 50% of its rival’s shares for the deal to proceed.

Vonovia said the latest tally showed he only received commitments for 47.6%. A final result is expected on Monday.

The deal would create a $ 22 billion real estate giant with 550,000 apartments.

“A combination of the two companies makes a lot of sense,” Vonovia chief executive Rolf Buch said in a statement. “Unfortunately, an insufficient proportion of the current shareholders of Deutsche Wohnen have returned their shares.”

The deal was controversial in Germany amid tensions over skyrocketing rents ahead of the September general election. Executives promised the merged company would work with politicians to provide affordable housing. Read more

The offer price of 52 euros per share was fair, Vonovia said on Friday, although it now plans to “carefully consider all of its options,” including launching another offer. public which could potentially soften the deal.

Buch failed in his attempt to buy out Deutsche Wohnen in 2016. But unlike last time, the CEO of Deutsche Wohnen is in favor of the deal.

“The challenges of the real estate market could be tackled even better together,” Deutsche Wohnen CEO Michael Zahn said in a statement.

Earlier on Friday, a person familiar with the matter said that some hedge funds, which hold around a third of Deutsche Wohnen’s shares, may not have tendered shares in hopes that a deal would eventually be reached at a higher price.

To complicate matters, a number of hedge funds and index funds that hold Deutsche Wohnen shares may only trade their shares after the minimum acceptance quota is reached, Vonovia said.

“We are not in distress,” Buch later told Reuters in an interview. “Vonovia can continue as before, even without Deutsche Wohnen. Our business model is not in question.”

Reporting by Alexander Huebner and Matthias Inverardi; Written by Maria Sheahan and Tom Sims, edited by Kirsten Donovan, Keith Weir and David Evans

Our Standards: Thomson Reuters Trust Principles.

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