Vienna-listed Immofinanz has substantially raised its offer for cross-town rival S Immo, upping its earlier bid by 23%, albeit with strings attached. Immofinanz is already the biggest shareholder in S Immo with 26.5%, but with this latest attempt to swallow S Immo, the company needs to raise up to €1.14bn for a complete takeover. Additionally the offer would be conditional upon S Immo removing a voting rights cap from its statutes of 15% for its shareholders to enable Immofinanz to surpass the required 50% mark.
Both companies have sizeable real estate holdings in Germany, and also across Central Europe, which have seen many of their retail, hotel and office tenants struggling.
The two companies have long been seeking ways to merge or fully pool their resources, but several earlier attempts have failed at the execution stage - the most recent just before the onset a year ago of the coronavirus pandemic. S Immo itself holds a 12% stake in Immofinanz and a 6% stake in fellow.listed CA Immo, which in turn was the subject of a failed Immofinanz takeover bid in 2018.
The complicated web of mutual cross holdings among the big Viennese listed companies has generally led to such deals being tripped up before the finish line. Adding to the complications this time is the presence of private equity investor Aggregate, who recently increased its stake in S Immo to 10.8%. Aggregate is competing with US private equity group Starwood, who are also trying to acquire CA Immo.
Aggregate also holds a stake in Immofinanz, and as we've been reporting in the pages of REFIRE, is currently mounting a bid for the third big player in Austria, CA Immo, which likewise has big holdings of prime office property and valuable landbanks in Germany's big CBD, particularly Frankfurt, Munich and Berlin. Aggregate is the investment vehicle of Austrian investor Günther Walcher.
The pandemic saw the shares of both Immofinanz and S Immo plunge last year, by nearly 30% and 25% respectively.
Weary observers of the never-ending incestuous takeover moves in Vienna probably believe that the three protagonists are ultimately headed for some sort of three-way mega merger. In any event, analysts in Vienna were largely negative on Immofinanz's latest approach to S Immo, saying the bid was too low.
For one thing, S Immo has a higher EPRA NAV per share than its would-be predator, closer to €24.00 based on its 2020 figures, while its shares have been performing strongly in any event over the past six months. Its balance sheet is strong with 44% equity and an LTV well below 50%. Its recent €150m seven-year green bond with a 1.75% coupon was well-received in the market. It has also bolstered its management team with the addition of two familiar heavyweights - Bruno Ettenauer, the former CEO of CA Immo as new CEO, and Herwig Teufelsdorfer, former board member of BUWOG, as CIO.
Over at CA Immo, which is largely focused on office properties, any talk of mega-mergers with its two squabbling Viennese neighbours was swatted away last week by CEO Andreas Quint, who said, "From a strategic point of view, this is of no interest to us. As a stand-alone business we're much better off." CA Immo sold its holding in Immofinanz last year at a good price, and Iikewise Immofinanz has no further holding in CA Immo. As to the Starwood 29.99% holding in CA Immo, which the Americans want to increase as part of a takeover bid, Quint said it would be mid-April before they could examine Starwood's latest offer more closely.
Quint said in its CA Immo's recent online press conference that the company was well equipped to withstand the coronavirus pandemic. 90% of its holdings were offices, 6% hotels and 4% other use assets, located about 47% in Germany, 42% in eastern Europe and 11% in Austria. "We're concentrated on offices in the capital and principal cities in six countries, in first-class locations, with first-class properties and first-class tenants - and that's what it's about", said Quint.
