Vonovia’s €19b takeover of Deutsche Wohnen strands

What was set to be Europe’s largest real estate transaction of the year so far has fallen through after listed residential giant Vonovia failed to secure enough backing from shareholders in rival group Deutsche Wohnen for its takeover bid.

In a statement issued on Monday, Vonovia said it had failed to reach the minimum acceptance threshold of 179,947,733 Deutsche Wohnen shares - corresponding to around 50% of the share capital of Deutsche Wohnen – by the deadline of 21 July. 'The closing condition has therefore definitively failed,' the Bochum-based company said.

In a statement issued on Friday, Vonovia said the latest tally indicated it had only received tender commitments for 47.6% of the shares.

'As a consequence of the definite failure of this closing condition, both the takeover offer has lapsed and the agreements which have been entered into as a result of the acceptance of the takeover offer have ceased to exist.' Vonovia added that the acceptance period of the offer would not be extended.

A deal would have seen Germany’s two largest residential landlords merge in a roughly €19 bn tie-up, creating an entity controlling 550,000 apartments with a strong presence in Berlin.

On Friday, Vonovia CEO Rolf Buch reiterated the rationale behind the merger, despite acknowledging that the acceptance threshold had not been met.

‘A combination of the two companies makes a lot of sense,’ Buch said in a statement. ‘Unfortunately, an insufficient proportion of the current shareholders of Deutsche Wohnen have turned in their shares.’

The latest bid marks Vonovia's third attempt to swallow Deutsche Wohnen. It comes at a time of heightened political tension over the residential market in Germany, particularly in Berlin where public anger over rising rents and the lack of affordable housing has mounted in recent years. Buch failed in his 2016 bid to take over Deutsche Wohnen, but unlike then, Deutsche Wohnen's CEO Michael Zahn was in favour of a deal this time.

‘The challenges on the real estate market could be shouldered even better together,’ Zahn said.

The new combine, which would have had a market capitalisation of around €45 bn and a property portfolio valued at almost €90 bn, had already received the approval of Germany’s antitrust authorities.


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