Listed German shopping centre operator Deutsche Euroshop (DES) saw its shares soar after it received a takeover offer from Alexander Otto of the famous Otto catalogue group and US private equity investor Oaktree Capital, to buy up the share that Otto does not already own.
The bidding consortium, known officially as Hercules BidCo, is offering €1.4bn for DES. The shopping centre operator's management and supervisory boards have indicated their approval of the offer.
DES shareholders are to be offered a total of €22.50 per share, consisting of €21.50 per share plus one euro as dividend for the financial year 2021.
Hercules BidCo is backed by a joint holding company of financial investor Oaktree and Cura, the asset management and family office of the Otto family. Alexander Otto is already the largest single shareholder of Deutsche Euroshop with a 20% shareholding. Like its competitor, ECE, the company has therefore already been part of the Otto family's sphere of influence.
Alexander Otto, son of the original mail order house founder Werner Otto, is also a member of the Supervisory Board of the Otto Group, on which his half-brother Michael Otto also sits. The latter had led the group with brands such as Otto, Hermes, and MyToys as CEO for decades.
For this latest takeover, which comes while DES is already undergoing major restructuring, the Otto family are targeting a minimum acceptance threshold of 50%, plus one share, including the shares in DES that it already controls. The acceptance period will start in June and the transaction is expected to close in the third quarter of 2022, the bidders said in a statement.
DES's shares have been languishing for years, in keeping with retail-related stocks generally underperforming in the light of encroaching ecommerce gains, but they really fell off a cliff with the onset of the pandemic. This saw several of the company's retail tenants closing up shop or being propped up through rent reductions.
The Otto bid represents a premium of nearly 45% over DES's previous share price of €15.63, and now sees the stock trading at its highest level in more than two years.
DES is listed in the German SDAX index for smaller companies. It currently has stakes in 21 shopping centres in Germany, Austria, Poland, the Czech Republic and Hungary. The portfolio includes the Main-Taunus-Zentrum near Frankfurt, one of the largest shopping centres in Germany. Other prominent centres include the Altmarkt-Galerie in Dresden and the Galeria Baltycka in Gdansk.
