GERMANY – Real estate company Deutsche Wohnen is to acquire rival GSW Immobilien in a public takeover that will see the merged entity managing a €8.5bn property portfolio.
In a statement, Deutsche Wohnen, which valued GSW Immobilien's equity at €1.75bn, said the deal would allow it to achieve the "critical size" it needed to further establish itself in the European market.
As part of the deal, GSW Immobilien shareholders will receive 51 Deutsche Wohnen shares in exchange for 20 GSW Immobilien shares – an exchange ratio of 51:20.
Michael Zahn, chief executive at Deutsche Wohnen, said: "With the combination of Deutsche Wohnen and GSW, the two companies combine their strengths and create a leading company by European standards.
"All of our stakeholders will benefit from this merger. We will create significant added value based on the large potential of the Berlin market and the expected synergy effects."
Previous shareholders of Deutsche Wohnen will receive a share of 57% in the merged company, while the previous shareholders of GSW Immobilien will receive a share of 43%, provided all GSW Immobilien shares are exchanged.
The acquisition of GSW Immobilien is still subject to regulatory approval, and Deutsche Wohnen said it would invite its shareholders to an extraordinary general meeting on 30 September to vote on the deal, which is expected to close in the first half of 2014.
Last year, the chairman of the supervisory board and the executive chairman at GSW Immobilien resigned following pressure from shareholders initiated by the €140bn Dutch asset manager PGGM.
According to PGGM, the appointment of Bernd Kottmann was "opaque".
The asset manager also questioned the independence of both the selection committee and the supervisory chairman.