By Mauro Orru 
 

Shares in German residential-property company Deutsche Wohnen SE soared Tuesday after peer Vonovia SE put forward a takeover bid valuing the company at about 19.08 billion euros ($23.31 billion).

At 0830 GMT, Deutsche Wohnen shares traded 15% higher at EUR51.92, while Vonovia's shares traded 4.1% lower at EUR49.97.

Vonovia said late Monday that it would pay a total consideration of EUR53.03 per Deutsche Wohnen share, with an offer price of EUR52 in cash plus Deutsche Wohnen's proposed dividend of EUR1.03 per share.

The offer, which represents a 17.9% premium to Deutsche Wohnen's Friday closing price, could create Europe's largest residential real-estate group with a real estate value of about EUR90 billion and a market capitalization of around EUR45 billion.

Deutsche Wohnen backs the deal aimed at establishing a "tenant-oriented and socially responsible housing company" that will work in close liaison with policy makers. Deutsche Wohnen's Chief Executive Officer Michael Zahn said at a press conference that the offer was fair.

"The housing market is facing major challenges, especially in the German capital: affordable and senior-friendly apartments are in short supply, many buildings need to be refurbished to improve energy efficiency, and clearly there is a need to build more affordable new housing. The combination with Deutsche Wohnen now gives us the opportunity to effectively tackle these challenges," Vonovia Chief Executive Rolf Buch said.

Vonovia estimates the deal will bring cost savings of EUR105 million per year, mostly from the joint management of the portfolio of more than 500,000 apartments as well as falling costs.

Berenberg analysts said the estimated synergies should be achievable, with Vonovia's development pipeline receiving a boost from the merger.

"As residential real estate offers substantial operational synergies, we regard the envisaged cost advantages as achievable and think that Vonovia's development pipeline will be strengthened by Deutsche Wohnen's development activities," Berenberg analysts said.

Vonovia expects to complete the takeover by the end of August.

 

Write to Mauro Orru at mauro.orru@wsj.com; @MauroOrru94

 

(END) Dow Jones Newswires

May 25, 2021 04:52 ET (08:52 GMT)

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