Vonovia says new takeover of Deutsche Wohnen would be fruitless
Germany’s largest housing company Vonovia SE saw fit to issue a statement on March 24th to counteract rumours that it was planning a renewed takeover attempt of largest rival Deutsche Wohnen AG.
The Bochum-headquartered Vonovia said, “The board sees little chance for such a transaction at the moment and under the current circumstances”, in a reference to the Berlin ‘Mietendeckel’ or rental freeze for the next five years, which came into effect at the beginning of the year. It added, such a transaction would only be conceivable if ‘fundamental issues were resolved and there was political support’ in Berlin. The company’s current priority is addressing the Covid-19 crisis, Vonovia added.
Deutsche Wohnen’s shares had been recovering strongly from their mid-March coronavirus-depressed low, but reacted negatively to the Vonovia statement.
Vonovia had not specifically denied the rumours the day before, suggesting that a possible takeover would be very dependent on political approval. It said, “Generally, acquisitions are an integral part of our strategy and are looked at continually.” CEO Rolf Buch said he and Vonovia’s top management had not had specific discussions with the Berlin Senate or local politicians about a possible move to take over its rival.
Vonovia has already attempted, four years ago in 2016, to take over the Berlin-headquartered Deutsche Wohnen, which currently has a market capitalisation of €13bn. The takeover attempt failed when Deutsche Wohnen’s shareholder rejected the offer terms.
Vonovia owns 416,000 apartment in Germany (mainly, with about 40,000 units in Berlin), Austria and Sweden, and manages a further 79,000 on behalf of third parties, with its portfolio valued at €53.3bn. It listed on the stock exchange in 2013, and has been a member of the DAX-30 index of leading German companies since 2015.
With around 161,000 apartments, Deutsche Wohnen has a heavy focus on the Berlin market (112,000 units), where valuations have stagnated or declined slightly after the government earlier this year froze rents until 2025. Although the law is currently in effect, Germany’s top court is considering a case claiming the rent cap measures are unconstitutional.
Political representatives were quick to comment on the rumours of the renewed Vonovia attempt at further enlargement. Katrin Schmidtberger, Green party member of the ruling red-red-green coalition in the Berlin Senate said, “We in the coalition have made it our goal to rearrange the Berlin housing market and to make it more serving of the common good in the long term. We want all Berliners to be able to live fairly and we want to maintain the social cohesion of our society.” Both Deutsche Wohnen and Vonovia have business models which run counter to the achieving of this goal, she said, and instead of one taking over the other, the housing stock of both companies in Berlin should be confiscated and put into a company dedicated to the common good.
Her views were echoed by the Berlin Tenants Association BMV, whose president Reiner Wild said he saw little difference between the two companies, which he said both demanded too high rents from their tenants.
Rouzbeh Taheri, the main spokesman for the Initiative Deutsche Wohnen und Co. Enteignen, which wants to expropriate all housing owned by companies with 3,000 or more units in Berlin, declared: “The process of concentration in the real estate industry looks like it’s getting a further impulse here, with Vonovia trying to take advantage of a beaten-down share price to swallow Deutsche Wohnen. This doesn’t bode well for tenants. When a shark landlord swallows another shark landlord, then inevitably tenants come under further pressure.
“We’ve always been striving for the communising of the big property companies, and nothing’s changed there. We’re demanding of the politicians that they express their opposition to this possible takeover in the strongest possible terms. This huge concentration of power would be extremely damaging to the prospect of providing adequate social housing in Berlin”, he said.