German real estate investor TLG Immobilien and hotel and office investor Aroundtown have finalised terms for a proposed merger which will create a new company with a combined total of €25 bn of assets.
Under the terms of the all-share deal – the existence of which was reported by PropertyEU early in negotiations – TLG shareholders will get 3.6 Aroundtown shares, at a €27.66 offer price per TLG share - a 3.2% premium.
Aroundtown is one of Germany's largest commercial landlords. The merger contains ‘significant synergies’ according to the parties, with overlap in Berlin, Frankfurt, Dresden, Leipzig, Hamburg, and access to Munich, Amsterdam and London, representing over half of the combined portfolio.
As a result, it is expected the pre-tax funds from operations will increase from €110 mln to €139 mln over time, according to TLG.
Welcoming the deal, Sascha Hettrich, chairman of TLG said: 'The proposed combination is a promising next step in the evolution of TLG and enables the creation of an attractive company for all our shareholders and stakeholders. The increased scale enables the combination to unlock upside potential across the organization, where the role and contribution of TLG is sustainably reflected in the new governance structure.'
Shmuel Mayo, CEO of Aroundtown said: ‘After jointly announcing non-binding terms, we are pleased to be able to announce concrete plans to combine Aroundtown and TLG into a leading European commercial real estate player. This transaction will be accretive to both shareholder groups from year 1, in terms of FFO and NAV per share, portfolio quality and strategic positioning.
Gerhard Cromme, chairman of Aroundtown's advisory board commented: 'As previously stated, the strategic, operational and financial merits of merging the two companies are crystal clear to all of us. We have concluded our conversations and we are fully committed to continue working towards the consolidation of the leading European commercial property company in terms of scale, portfolio attributes, returns, risk, management and governance.’
The members of the management board of TLG said: ‘The transaction with Aroundtown is a unique opportunity for TLG to strengthen our presence in key cities in Germany as well as access new markets. Our combined development pipelines and market reach enables us to accelerate our growth together.
‘We will be able to achieve significant synergies resulting in higher operating margins, improve our credit profile and thereby attain a financial profile that would have been hard to achieve on our own.’
