Deutsche Wohnen firm on Conwert offer, open to bid for itself

Merger and acquisition fever rose a few degrees in the German-speaking listed property sector on Thursday after Michael Zahn, CEO of Deutsche Wohnen, said the company would not stand in the way of a good takeover offer from a larger peer.

'I’m always thinking about what’s best for investors,’ Zahn said during an analyst conference call when asked about his attitude to a possible takeover offer for Deutsche Wohnen.

The comments by the boss of Germany's second-largest listed property company are noteworthy as Deutsche Wohnen has itself tabled a €950 mln offer to acquire Austrian listed real estate company Conwert Immobilien.

Conwert's board initially seemed to dismiss the overture this week when it suggested the offer of €11.50 per share did not reflect the full value of the company. Conwert owns €1.8 bn of residential property and around €1 bn of commercial property in Germany and Austria. A day later, however, Conwert's board clarified that it was neutral on Deutsche Wohnen's offer. Deutsche Wohnen reiterated that it would not increase its offer.

The bid comes at a time of increasing consolidation within the German and Austrian listed property sector, particularly among residential specialists. The trend is being driven by players' need for scale, the availability of cheap loans in the current low interest rate environment, plus rising share prices.

Deutsche Annington, Germany's largest listed landlord, is very much in merger & acquisitions mode. It is currently finalising its €3.9 bn takeover of peer Gagfah and on 30 April Deutsche Annington's shareholders will be asked to endorse changing the combined group's name to Vonovia. More importantly, shareholders will also be asked to back raising new capital to fund new potential portfolio acquisitions. The company has said another takeover was unlikely as the focus is on integrating Gagfah.

Separately, Vienna and Warsaw-listed Immofinanz announced on Thursday that it is convening an extraordinary general meeting on 17 April to seek shareholder permission for its €530 mln bid for a 29% stake in Austrian peer CA Immo.

This is a counter-bid to the €422 mln share offer tabled officially on Wednesday by CA Immo and Russian investor O1 Group for a 13.5% stake in Immofinanz. If successful, CA Immo and O1 Group then plan to buy further shares in Immofinanz to give them up to 25% of the voting rights at Immofinanz's annual general meetings.

Immofinanz earlier rejected the Austro-Russian offer as 'ridiculous’, while CA Immo and O1 Group dismissed Immofinanz's partial takeover offer aimed at CA Immo as an 'emotional response' to their bid. CA Immo and O1 Group say they don’t currently intend to mount a full takeover of Immofinanz but market commentators have told PropertyEU a merger between Immofinanz and CA Immo may be the best option.