German property group Deutsche Wohnen launched an all-share bid for rival GSW Immobilien that values the company at euro 1.75 billion ($2.34 billion) to create a company focused on Berlin's thriving real estate market. Deutsche Wohnen said on Tuesday it would offer 51 of its shares for every 20 shares in GSW, which would give GSW investors around 43 per cent of the enlarged company.
"With more than two-thirds of the combined portfolio located in Berlin, the combined company would have a strong focus on one of the most dynamic growth regions in Germany," Deutsche Wohnen said in a statement, adding it expects the deal to close in the first half of next year.
The offer represents a premium of 15.4 per cent over the volume-weighted average share price of GSW over the past three months. Deutsche Wohnen expects the takeover, which is contingent upon receiving a minimum 75 per cent acceptance level and a capital increase against contribution in kind, to lead to roughly euro 25 million in annual synergies after the integration is complete.
"The complementary portfolio, particularly in Berlin, will result in increased economies of scale in the management and administration of properties as well as savings on the procurement side," it added, citing facility management, insurance, and energy costs.
Deutsche Wohnen will ask shareholders to approve the capital increase at an extraordinary general meeting on September 30.
Deutsche Wohnen shares were indicated 0.7 per cent lower in pre-market trade, while GSW was seen jumping 10.9 per cent from Monday's closing price of euro 31.47.
"With more than two-thirds of the combined portfolio located in Berlin, the combined company would have a strong focus on one of the most dynamic growth regions in Germany," Deutsche Wohnen said in a statement, adding it expects the deal to close in the first half of next year.
The offer represents a premium of 15.4 per cent over the volume-weighted average share price of GSW over the past three months. Deutsche Wohnen expects the takeover, which is contingent upon receiving a minimum 75 per cent acceptance level and a capital increase against contribution in kind, to lead to roughly euro 25 million in annual synergies after the integration is complete.
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It will boost Deutsche Wohnen's funds from operations per share by a medium single-digit percentage figure, it said.
"The complementary portfolio, particularly in Berlin, will result in increased economies of scale in the management and administration of properties as well as savings on the procurement side," it added, citing facility management, insurance, and energy costs.
Deutsche Wohnen will ask shareholders to approve the capital increase at an extraordinary general meeting on September 30.
Deutsche Wohnen shares were indicated 0.7 per cent lower in pre-market trade, while GSW was seen jumping 10.9 per cent from Monday's closing price of euro 31.47.