Full steam ahead for GSW/Deutsche Wohnen mega-merger
Germany is about to get a new giant property company following the removal of the last regulatory obstacles to the merger of Deutsche Wohnen AG and GSW Immobilien AG. Last week more than the required three quarters of GSW’s shareholders gave their approval to their company’s acquisition by the larger Deutsche Wohnen, paving the way for a new company with holdings of more than 150,000 residential units, valued at about €8.5bn.
Deutsche Wohnen’s CEO Michael Zahn described the result as "fantastic for all parties", adding that "This is a very clear mandate from both groups of shareholders, and our complete attention and energy will now be focused on the bringing together of the two companies.“ The new company will be the second-largest residential property company in Germany, after Deutsche Annington and ahead of Gagfah.
The final outcome of shareholder votes will be revealed by Deutsche Wohnen on the 4th November, with those GSW Shareholders who rejected the takeover offer being given the opportunity to trade in their shares up until the 18th November. Deutsche Wohnen recently approved a capital increase to finance the takeover, while the deal had already been cleared for go-ahead by the German anti-trust authorities.
The takeover is a share exchange deal, with Deutsche Wohnen offering 51 of its shares for every 20 of GSW's, representing an acquisition price of €1.7bn. Upon completion, current GSW shareholders will hold a 43% stake in the combined business. Both groups are listed on the Frankfurt Stock Exchange and already have a number of shareholders in common, including BlackRock, MFS and Norwegian investor Norges Bank.
The deal is the largest in the German property sector since Goldman Sachs' Whitehall Funds bought Düssedlorf-based LEG Immobilien in 2008 for €3.4bn. It catapults Deutsche Wohnen into the top league of European property firms by market value, which is likely to attract further investor attention – not just for itself but probably for the whole German property sector as a result of perceived extra liquidity.
Deutsche Wohnen's CEO Zahn will become the new CEO of the combined group, while the co-CEOs of GSW Immobilien, Jörg Schwagenscheidt and Andreas Segal, will become board members of the new company. The business will continue to focus its growth strategy on the booming Berlin residential market, but will also extend its reach to other dynamic regions to benefit from economies of scale. "This also provides a clear signal of continuity to customers," GSW said. "GSW and Deutsche Wohnen already apply similar operational business models to carry out their activities and to rely on a long-term management of their properties."