Germany's largest listed residential landlord Vonovia has agreed to buy its Austrian peer Buwog in an all-cash deal valuing the company at around €5.2 bn.
Buwog shareholders are being offered €29.05 in cash per share, a premium of 18.1% above last Friday's closing share price on Vienna Stock Exchange. The deal will combine Vonovia's residential portfolio (around 350,000 apartments) with Buwog's residential portfolio (49,000 apartments).
'Buwog is an excellent fit with our company: the housing stocks complement each other perfectly - in Germany and Austria,' said Rolf Buch, CEO of Vonovia. 'Likewise, Buwog has a leading position in the development sector. As such, a takeover offers clear positives for tenants and shareholders of both companies.'
'Taking into account business models and portfolios, a merger of Buwog and Vonovia offers strategic advantages for both companies,' commented Daniel Riedl, CEO of Buwog. 'The value and growth prospects of our attractive portfolio as well as our strong, successful position in the development sector will be duly taken into account in the present offer. Subject to legal and substantive examination of the offer document, we will recommend our shareholders to accept the offer.'
Around 55% of apartments owned by Buwog are located in Germany, including Berlin and Hamburg, while its Austrian apartments are located in regional centres such as Graz, Klagenfurt, Salzburg and Villach, as well as Vienna. Vonovia is well-represented in the Austrian capital following the acquisition of landlord Conwert, which was agreed a year ago.
At that time, Vonovia added 24,500 homes to its portfolio, after its €3 bn cash offer for Conwert received shareholder backing.
The business combination agreement signed by the companies will see Riedl become a member of the management board of Vonovia responsible for Austria and the development business.
Vonovia envisages financing the offer with debt capital. The completion of the takeover is subject to 50% of Buwog's shareholders, plus one, accepting it.
Vonovia said it expected cost benefits of €30 mln per year, arising from the joint management of both portfolios in Germany and Austria, to be realised by end-2019.
The annoucement follows a period of intense M&A activity in the real estate sector, namely Unibail-Rodamco's bid to buy Westfield for €21 bn, and Hammerson's takeover of intu for €3.86 mln.
