Vonovia ups bid for Deutsche Wohnen as expropriation vote looms
Germany's largest private landlord, Vonovia, has increased its offer for its rival Deutsche Wohnen to €19.1 billion in its third attempt at a takeover, just a week after the previous one failed to gain the necessary support from its target's shareholders.
Pending regulatory approval - which is unlikely to be a problem due to Germany's fragmented rental market - Vonovia has increased its offering by €1 per share to €53 each.
Shares in Deutsche Wohnen closed at €52.64 on Friday, rising to €52.70 at the opening on Monday after the news of the increased offering broke. On closing yesterday, they had risen to €52.86 per share.
Read more: Germany's largest landlords agree €18bn merger amid expropriation calls
Vonovia is betting that the extra €1 per share will suffice in swaying enough Deutsche Wohnen shareholders after narrowly missing the 50% threshold in its last takeover attempt. The property firm has also received additional support from the Bank of America to help secure the bid.
"As well as Morgan Stanley, we have now also brought Bank of America on board to better address the shareholders of Deutsche Wohnen,” Vonovia CEO Rolf Buch said on Monday, adding that the company had possibly been "too confident" that its previous bid would succeed.
The deal, if successful, would create Europe's largest real estate company, controlling over 500,000 homes, further consolidating the power of large property owners. Nearly 75% of Deutsche Wohnen properties are in Berlin.
"A combination with Vonovia in partnership still makes strategic sense and offers significant benefits," said Michael Zahn, Deutsche Wohnen CEO on Sunday.
Landlords in Germany are facing mounting public pressure over rising rent prices, particularly in Berlin. Deutsche Wohnen has become the main target of a campaign to expropriate some of the properties in its portfolio ever since buying a large swathe of the German capital's social housing in the late 1990s after it was sold to pay off public debt following the fall of the Berlin Wall and the subsequent reunification.
A 2017 report by Jones Lang LaSalle found that rent prices in Berlin had skyrocketed by as much as 70% in the previous 12 years. A major reason for the sharp rise was put down to the simultaneous increase in new Berlin residents - 8% since 2010.
Read more: Germany's largest landlords agree €18bn merger amid expropriation calls
In May, a campaign by Deutsche Wohnen Enteignen (Expropriate Deutsche Wohnen) gathered more than enough local signatures - far exceeding the 170,000 threshold - to force the Berlin Senate to call a referendum on the issue of renationalisation.
In total, the campaign gathered more than 359,000 signatures, making it the most successful campaign of its kind in the history of Berlin and receiving more public backing than any single political party in the last Berlin elections in 2016.
One particularly thorny issue for the campaign is the exclusion of non-German citizens in both the signature-gathering stage and the referendum. It is estimated that more than 60% of the signatures came from foreigners living in Berlin. Non-Germans also are not eligible to vote in the referendum, despite the high number living in Deutsche Wohnen property.
Rosa Silva of the Right to the City for All working group, which is part of the Deutsche Wohnen Enteignen campaign, said: "The housing crisis is also a crisis of democracy – this is a fact that we as migrants are aware of most starkly. Only once everyone has the ability to politically co-determine the future of our city can we achieve more equal access to housing and other necessities. A first, long-overdue step in this direction is full voting rights for all people who live in Berlin."
The referendum will take place on September 26 and despite being non-binding, activists remain confident that a yes vote for expropriation will force the Senate to take action.
If successful, ownership of Deutsche Wohnen property would be transferred into public hands, with future decisions being made by councils, comprised of residents and employees on a local, building-by-building basis.
In a statement, Deutsche Wohnen said the offer to the State of Berlin to acquire 20,000 apartments remains, and that the discussions with the city will continue.
The latest takeover offer requires an exemption from a one-year blocking period from Germany's regulatory authority, BaFin. "I believe that BaFin will give us the green light relatively quickly to submit a new offer," Vonovia’s Buch said Monday.
While Buch said that he expects a decision from BaFin later this week, it should be clear by the end of September whether Vonovia will be successful in its third attempt to woo Deutsche Wohnen shareholders.
Back to Homepage
Back to Construction & Engineering