Deutsche Wohnen investor says Vonovia’s highest bid is still “not fair”


Updates from Deutsche Wohnen AG

One of the largest shareholders of German owner Deutsche Wohnen has taken a sweet offer from rival Vonovia, saying its € 18 billion offer continues to underestimate the company.

Vonovia announced late Sunday that it plans to make a revised offer for Deutsche Wohnen at € 53 a share, 2 per cent higher than its initial bid totaling € 52 per share which was rejected on last month.

But Michael Muders, a fund manager at Union Investment, the third-largest asset manager in Germany, told the Financial Times on Monday that the improved offer was still “unfair” because it did not reflect the true value of the asset. .

The first Vonovia approach fell at the end of last month after failing to tighten the required threshold of support for shareholders. A hostile offer from Vonovia was rejected in 2016.

The revised offer is also subject to a minimum acceptance percentage of 50 percent of Deutsche Wohnen investors. But Vonovia has increased its stake in recent days to just under 30 per cent, meaning it should influence another 20 per cent of shareholders.

Deutsche Wohnen argued the proposed deal, which would create a group that owns 500,000 apartments in Germany and also properties in Sweden and Austria worth nearly 90 billion euros. The two companies say the transaction will generate annual cost savings of 105 million euros.

Muders said the higher bid did not fully reflect the fundamental value of Deutsche Wohnen’s real estate assets, did not include a control premium and that cost savings would not be shared with Deutsche Wohnen’s shareholders.

Union holds a 2.5 per cent stake in Deutsche Wohnen, making it one of the owner’s largest shareholders. Last month, he turned down Vonovia’s first offer.

Both Deutsche Wohnen and Vonovia have rejected criticism, pointing to the fact that the sugar bid implies a 17 per cent premium on the undisturbed share price of the target.

Deutsche Wohnen added that conversations with shareholders have shown that most investors support taking control.

Muders argues that the book value of Deutsche Wohnen’s property is outdated because it does not reflect a primary court decision in April that killed a highly controversial litigation limit imposed by the Berlin local government.

At the end of March this year, Deutsche Wohnen said its net asset value was € 52.50 per share. But Muders insisted that the value of the Berlin-based property had increased due to the court’s decision.

He said he estimated a net worth of about 56 euros per share. “We are very uncertain whether the interests of shareholders will always be the highest priority for Deutsche Wohnen’s management,” he added.

Deutsche Wohnen said it will publish updated estimates on the value of net assets on August 13, alongside its half-year results.

“The bid price of € 53 per share is slightly higher than the expected net intangible asset,” he said, noting that previous calculations were already based on the assumption that the income limit was unconstitutional and serious. illegal. The court’s decision, therefore, “does not call for a change in Deutsche Wohnen’s valuation hypothesis or outlook,” he added.

Rolf Buch, executive director of Vonovia, told the Financial Times that “the first offer did not fail because of the price”.

Shares in Vonovia rose 1.2 percent at mid-trading on Monday, while those at Deutsche Wohnen were flat at just under € 53.

Vonovia expects progress from German financial watchdog BaFin for a revised offer later this week.



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