Germany’s top listed residential landlords merge in €18bn deal

Vonovia and Deutsche Wohnen own 500,000 apartments across the country

Germany's two largest listed residential landlords, Vonovia and Deutsche Wohnen, are to combine in an €18 billion all-cash deal that will create a company with more than 500,000 apartments across the country.

Vonovia is offering Deutsche Wohnen shareholders €53 a share, including an expected €1 dividend. That is a 25 per cent premium to Deutsche Wohnen’s average share price over the past three months.

The deal will give shareholders "long-term strategic benefits", Thomas Rothaeusler, a property analyst at Jefferies, noted. It will be the year's biggest takeover in Europe and the biggest-ever in the region's real estate sector.

Shares in Deutsche Wohnen shot up more than 15 per cent to almost €52 on Tuesday while Vonovia’s stock lost more than 4 per cent to €49.92.


The transaction would further consolidate the power of large property owners, an issue that has inflamed activists especially in Berlin. German landlords have faced intense public pressure over the past few years over rising prices, particularly in the nation's capital.

Deutsche Wohnen has been the main target of activists after buying a large amount of social housing that was put up for sale by the city to pay down public debt after the Berlin Wall fell.

The transaction is a rare example of two listed companies on Germany’s benchmark Dax index combining. Recent instances include the ill-fated takeover of Dresdner Bank by Allianz and Bayer’s acquisition of pharmaceutical group Schering two decades ago.

Vonovia said the deal was expected to generate €105 million in cost synergies “from the joint management and the regionally complementary portfolios”, Vonovia said. The combined company would not cut staff numbers before the end of next year, the groups added.

"Now is the right moment to combine the proven performance and strengths of both companies," said Deutsche Wohnen chief executive Michael Zahn, who fought off a hostile €14 billion cash-and-share offer by Vonovia five years ago.

Both Mr Zahn and Deutsche Wohnen finance director Philip Grosse will join the enlarged group's executive board.

The deal includes concessions to Berlin and protesting tenants in an effort at a "new beginning", Vonovia chief executive Rolf Buch said after talks with Berlin mayor Michael Mueller.

Vonovia and Deutsche Wohnen are willing to sell about 20,000 apartments to the state of Berlin as part of a proposed “pact” with regional politicians to help the housing market in Berlin. It will also build some 13,000 new units and limit rent increases. Mr Mueller welcomed the plan.

Mr Buch, who has been on a long-running acquisition spree, said the deal “gives us the opportunity to effectively tackle” the challenge to increase the supply of affordable and senior-friendly apartments, and to refurbish houses to make them more ecological. – Copyright The Financial Times Limited 2021/Bloomberg