Deutsche Annington Immobilien’s offer for GAGFAH is underway.

Deutsche Annington is to pay €3.9bn for the listed German residential investor. The combination will create a company with a €21bn portfolio of around 350,000 residential units.

Once merged, the new entity will be Continental Europe’s second-largest listed real estate company.

Deutsche Annington offered €122.52 in cash and five new Deutsche Annington shares for 14 GAGFAH shares at a combined value of €18 per GAGFAH share, based on Deutsche Annington’s closing price as of 28 November.

The offer comes at a premium of 16.1% to GAGFAH’s closing price and runs until 21 January next year.

Deutsche Annington will need a 57% minimum acceptance level on all outstanding GAGFAH shares.

The investor earlier this month said the merger would save as much as €84m in operational and financing costs, improving the companies’ respective credit profiles.

“Shareholders will benefit from the projected synergies of the combined company and the creation of an even more liquid and attractive equity investment on the financial markets,” the company said in a statement.

The two parties will invest around €500m in maintenance and modernising their combined housing stock.