German listed property company TLG Immobilien has launched a friendly takeover bid for peer WCM in a move that would create an entity with almost €3 bn of German commercial real estate under management.
On Thursday, TLG announced an all-share offer for 100% of the share capital of WCM offers one new TLG Immobilien share for each 5.75 WCM shares, implying a price of €3.36 per share.
WCM Beteiligungs- und Grundbesitz is a specialised commercial real estate firm based in Frankfurt/Main. The company owns €792 mln of real estate, split between retail (61.6%) and offices (38.4%) in cities such as Berlin, Frankfurt and Bonn.
TLG was listed by US private equity firm Lone Star on Frankfurt Stock Exchange in 2014, and Singaporean sovereign wealth fund GIC held 13% of the shares at end-2016. TLG's portfolio of office, retail and hotels was valued at €2.1 bn in March this year. The main focus is on office properties in Berlin and Frankfurt/Main, and the eastern German cities of Dresden, Leipzig and Rostock.
A combination of TLG and WCM would own almost €3 bn of German real estate.
'The takeover of WCM is a great opportunity for TLG Immobilien to strengthen our existing portfolio in attractive locations such as Berlin, Dresden, Leipzig and Frankfurt/Main, as well as expand our exposure to other West German economic growth hubs around Stuttgart, Hanover and Duesseldorf,' commented Niclas Karoff, member of the management board of TLG.
Both companies have signed a business combination agreement (BCA) in connection with the offer regarding the strategy and structure of the combined company and the intended future composition of the boards of TLG and WCM. On the basis of the BCA, WCM said it would support the offer and – after having examined the offer document – recommend that their shareholders accept it.
TLG also said it had entered into share tender agreements with WCM's major shareholders covering about 50% of the shares and voting rights in WCM. The shareholders who have agreed to tender their shares include German listed property group DIC Asset (26), supervisory board member Karl Ehlerding (4.9%) and WCM chief executive Stavros Efremidis (2.9%).
'We are convinced that the proposed combination with TLG represents a very attractive offer to our shareholders – the more so as the combined entities of WCM and TLG will benefit from additional potential of an enlarged group to exploit the growth opportunities in the German commercial real estate market,' said Efremidis.
Originally founded by Johann Heinrich von Schule in 1766, WCM is one of the oldest German stock companies. After an eventful history, WCM evolved into a leading investment company but was hit by a crisis in 2006 that led to the opening of insolvency proceedings. The insolvency was lifted in 2010 following a reorganisation.
'The takeover offer now announced results in a financially attractive scenario for the shareholders of DIC. Through the transaction, we will acquire a substantial share in an interesting German public limited company for commercial real estate,' added Aydin Karaduman, CEO of DIC Asset.
