German residential specialist Vonovia has revealed it is planning to 'submit a new takeover offer to Deutsche Wohnen shareholders in the near future' after its recent attempt failed to reach sufficient backing from its German peer's owners.
The board of Deutsche Wohnen said it supported the latest move, with the management of both companies agreeing that the combine was 'strategically compelling'.
The most recent Vonovia bid fell short of the minimum acceptance threshold of 179,947,733 Deutsche Wohnen shares - corresponding to around 50% of the share capital of Deutsche Wohnen – by the 21 July deadline. 'The closing condition has therefore definitively failed,' the Bochum-based company said at the time.
Vonovia went on to confirm that it had only received tender commitments for 47.6% of the shares, and said that the acceptance period would not be extended.
However, the company released a statement to the media on 1 August indicating it had decided to try another takeover attempt. If successful, the combine is expected to create a €19 bn residential giant controlling 550,000 apartments across Germany, and enjoying a strong presence in Berlin.
New takeover try
The latest announcement as of 1 August confirms that the boards of both companies see the merger as 'strategically and socially compelling' and reveals that they renewed their 'business combination agreement' this weekend.
In the statement, the two companies agree that together they will be able to tackle the major challenges in the housing market - climate protection, affordable housing and new construction - far more effectively together, and that a business combination will be equally beneficial for shareholders, tenants and the housing market.
On this basis, Vonovia said it intended to submit a new voluntary takeover offer to the shareholders of Deutsche Wohnen in the near future, maintaining the key parameters of the offer made on 23 June. Subject to their review of the new offer document, the boards of Deutsche Wohnen intend to recommend such an offer to their shareholders.
Rolf Buch, CEO of Vonovia said: 'We remain convinced that a combination of the two companies will bring strategic and economic benefits and support housing policy goals. Our plans also have the backing of key shareholders of Vonovia and Deutsche Wohnen.
'With our renewed offer, we are providing the highest degree of transaction security and thus acting in the long-term interests of all our stakeholders. At the same time, we stand by our commitments as a reliable political partner to use our combined strength to tackle the challenges of the housing market.'
Michael Zahn, CEO of Deutsche Wohnen added: 'A business combination based on partnership with Vonovia remains strategically compelling and will bring significant benefits. Our impression from recent discussions with our shareholders is that they also recognise this strategic logic.
'Moreover, many shareholders regretted that the transaction was not successful. We do not want to deprive them of the opportunity to approve the business combination under improved conditions.'
A new takeover offer requires exemption from the one-year blocking period from the financial regulator BaFin which usually prevents the immediate relaunch of a merger bid. Vonovia said the application for this exemption would be filed shortly.
If and as soon as BaFin gives the go-ahead, Vonovia will duly announce the offer, submit a new voluntary offer to the shareholders of Deutsche Wohnen to BaFin for review and, once approved, present it to the shareholders.
The terms of the bid will include a cash offer of €53 per share, with closing of the deal expected to take place in Q4 and thus at the end of the current financial year. The minimum acceptance threshold will be 50%.
This price offers Deutsche Wohnen shareholders a premium of 17.8% on Deutsche Wohnen's closing price on 21 May and of 24.9% based on the volume-weighted average price of the Deutsche Wohnen share over the three months up to 21 May 2021.
The Federal Cartel Office had already approved Vonovia's planned business combination with Deutsche Wohnen, as of 28 June.