German real estate investor TLG Immobilien has said it is mulling a potential merger with Aroundtown, Germany's largest listed commercial landlord, after buying a 10% stake in its rival.
TLG Immobilien acquired a 9.99% stake in its Luxemburg-based peer Aroundtown from Avisco Group, the largest shareholder of Aroundtown, for €1.016 bn.
The price agreed for the share deal is around €8.30 per share, corresponding to the net asset value of Aroundtown as of June 30.
As part of the deal, TLG also entered into an option agreement for a further stake of up to 4.99% in Aroundtown. If TLG excercises this option, it would become the largest shareholder in Aroundtown.
'Whilst there are various ways to grow a company, the best is to combine forces with leading market players in the same field,' said Sascha Hettrich, chairman of the supervisory board of TLG.
'Therefore, our strategy was to look for the industry partner who ideally fits with TLG, which has led to the acquisition of an initial 9.99% stake in Aroundtown and an option to further increase the stake up to 14.99%.
'We welcome working with Aroundtown towards a future merger of the two companies and creating one of the largest commercial real estate firms in Europe with a focus on top tier cities in Germany and the Netherlands,' Hettrich said.
In connection with the deal, TLG and Aroundtown have said they will evaluate a potential merger, supported by Avisco.
The combined companies would create a significant European commercial real estate company, with a gross asset value in excess of €25 bn, and a primary focus on offices and hotels in Germany and the Netherlands.
For over 25 years, TLG has owned and rented out commercial properties in Germany and holds a portfolio of properties worth €4.6 bn.
S&C represented TLG in the deal.