Austria's Immofinanz abandons bid for fellow-listed S Immo

All bets are now off in the ongoing saga of listed Austrian Immofinanz AG's takeover bid for fellow Vienna-listed S Immo. 

Immofinanz has now definitively abandoned its €1.4bn bid after S Immo's shareholders refused to sanction a structural change necessary to permit the merger. The stumbling block was the removal of the maximum voting right, which failed to reach the required 75% majority approval at the S Immo shareholders meeting held last week.

S Immo said that shareholders, with a turnout of almost 55%, rejected the elimination of maximum voting rights at the annual general meeting, which Immofinanz had called the ‘last chance’ for the merger to go ahead.

Immofinanz cancelled its offer following the vote, and said in a statement that an “analysis of voting behaviour” shows that it was the rejection of three large shareholders amounting to 28 pct of the voting rights – Aggregate Holdings, Peter Korbačka’s EVAX Holding and Erste Asset Management –that prevented the 75% majority being obtained.

The maximum voting rights rule, introduced in 2006, stipulates that no shareholder can hold more than 15% of the voting rights even if they own a higher percentage of shares. Immofinanz currently holds a 26.5% stake in S Immo.

Stefan Schönauer, CFO of Immofinanz, said: 'The vote created an opportunity to smooth the way for the combination of both companies and to form S Immo and Immofinanz into a major Austrian player that can compete in Europe’s top league. Unfortunately, the S Immo shareholders decided against this proposal and our offer is, therefore, no longer valid.'

Earlier this year, Immofinanz had raised its voluntary takeover offer for S Immo by 23% to €22.25 per share, representing a 40% premium to the average share price of S Immo over the last six months. 

S Immo’s CEO Bruno Ettenauer maintained that the bid was still too low and undervalued the company. ‘The offer is unattractive as it neither takes into account the current EPRA NAV, nor the expected increase in the intrinsic value of S Immo, he said, noting that when Immofinanz bought the S Immo share package in 2018, it paid a premium of 15% on the then EPRA NAV. ‘The shareholders of S Immo are now – three years later – also entitled to a price that corresponds to the value of the share. The price offered is far off in this respect.’

In mid-July, S Immo’s management board issued a statement saying it was selling its 5.96% stake in fellow Vienna-listed CA Immo, the third big Austrian real estate company, and would be tendering its shares into the takeover offer currently being made for CA Immo by Starwood Capital Group. S Immo said that at the offer price of €37.00 per share it expects a pre-tax cash inflow of €234.6m and a profit of nearly €100m on its stake, not including the nearly €25m in dividend payments it earned.