Vonovia tops Starwood with Skr9.5b bid for stake in Sweden’s Victoria Park

Germany’s biggest residential landlord, Vonovia, has outbid Starwood Capital to offer around €900m for a stake in Swedish residential group, Viktoria Park, thereby cementing the latest step in its strategy to grow the business outside Germany.

‘We are very excited about entering the Swedish market for the first time, and we are particularly happy that we identified Victoria Park as a company that follows the same business principles’, said Vonovia’s CEO Rolf Buch. ‘When we were made aware of the situation by Victoria Park’s financial adviser and we started to consider an amicable offer to Victoria Park’s shareholders, we realized that the company’s management is like-minded, and we share the same business philosophy – strong investment in housing for the long-term benefit of tenants. We are determined to continue to deliver the same high quality and living standard to all our tenants – in Sweden as well as Germany.’

Victoria Park owns almost 14,000 units in Stockholm, Gothenburg and Malmo. Vonovia, which is offering Skr38 in cash for Victoria Park’s common shares, has raised €995.8m via the placement of 26 million new shares with a view to using them to fund the takeover.Vonovia said its offer represented an 11.8% premium to Starwood's rival offer, which valued the company at around Skr8.68b. Victoria Park's board had recommended shareholders reject Starwood's approach, saying it did not reflect the company's value.

‘It is the bid committee’s opinion that [Vonovia’s] offer reflects Victoria Park’s value. The bid committee therefore unanimously recommends shareholders in Victoria Park to accept the offer,’ the company said in a statement.

Investors representing 37% of Victoria Park’s voting capital have already agreed to accept Vonovia’s offer, which runs until 18 June 2018 and which is contingent on securing more than 50% of voting shares.

‘It’s hard to say at this stage whether the 50% threshold will be reached,’ Pia Kinhult, head of host states relations at the European Spallation Source in Sweden and a board member at Victoria Park, told REFIRE. ‘However, Vonovia’s offer is quite generous, so it could appeal to shareholders who want to cash in. We think the two companies are a good fit, not least because of Vonovia’s sizeable residential experience and because they are looking to expand abroad.’

Since its IPO in 2013, Vonovia has acquired and integrated more than 250,000 units, whilst disposing of around 50,000 non-strategic units. While Germany is expected to remain its core focus, it has also expanded recently into other European markets. In March, it completed its acquisition of Austrian rival BUWOG for €5.2b. It also acquired Austrian developer Conwert for €2.9b in 2016and has a strategic partnership with CDC Habitat in France.