Vonovia drops key condition to secure Deutsche Wohnen takeover

Deutsche Wohnen SE

13/09/2021 21:10

By Matthias Inverardi
    DUESSELDORF, Sept 13 (Reuters) - German property group
Vonovia SE  VNAn.DE  on Monday ditched a requirement for a
majority of shareholders to back its takeover bid for Deutsche
Wohnen SE  DWNG.DE , in a move CEO Rolf Buch said meant the deal
could no longer fail.
    Vonovia's offer of 53 euros per share, which values Deutsche
Wohnen at 19.1 billion euros ($22.5 billion), is no longer
subject to gaining the support of more than 50% of shareholders,
the target company said in a statement.
    "Vonovia has waived the minimum acceptance threshold and all
other closing conditions of its takeover offer to the
shareholders of Deutsche Wohnen," Deutsche Wohnen said, adding
it saw no reason to withhold its consent to the waiver.
    The minimum acceptance period for the offer, originally set
at Sept. 20, will now be extended to Oct. 4.
    "The transaction cannot fail over the conditions," Buch told
Reuters in a telephone interview.
    Vonovia's bid to create a property empire spanning 550,000
apartments has struggled to reach the finishing line, even after
being sweetened, in part due to the intricate rules governing
takeovers in Germany.
    One problem is that such bids attract arbitrageurs playing
the so-called back-end game who hope to extract a higher price
later in the proceedings. Another is that passive funds
typically have their hands tied on voting until the outcome is
clear.
    Vonovia said it had secured control over more than 40% of
Deutsche Wohnen shares, not including a further 4% it can
acquire following completion of the takeover offer.
    "We will see how many it turns out to be in the end," Buch
said. Should acceptances remain below 50%, he added, Vonovia
would be able to raise its stake in Deutsche Wohnen by
underwriting a capital raise or by buying shares on the market.
    With Vonovia in the driver's seat, shareholders of Deutsche
Wohnen could say goodbye to dividend payments for the
foreseeable future, Buch said in a warning to the holdouts.
    The latest bid is the third attempt by Vonovia to swallow
Deutsche Wohnen, following an initial approach five years ago
and a renewed offer this summer. 
    The merger is controversial because of broad public concerns
over rising rents https://www.reuters.com/business/germanys-biggest-landlords-agree-22-bln-merger-2021-05-25
 - a hot-button issue ahead of a general election https://www.reuters.com/world/europe/what-are-main-issues-germanys-federal-election-2021-06-24
 on Sept. 26, especially in the capital Berlin which has sought
to impose rent controls.
    To appease the critics, Buch has pledged to sell 14,000
apartments to the Berlin city authorities, build new flats and
curb rent increases through 2026. On the same day as the general
election, Berliners will vote in a referendum calling for
legislation to empower city hall to expropriate major landlords.
 ($1 = 0.8474 euro)

 (Reporting by Matthias Inverardi in Duesseldorf
Writing by Douglas Busvine
Editing by Matthew Lewis)
 ((douglas.busvine@tr.com; +49 30 220 133 562;))