Deal to create $22 billion German property giant stumbles By Reuters

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© Reuters. FILE PHOTO: An office building of the German property group Deutsche Wohnen is pictured in Berlin, Germany June 2, 2020. REUTERS/Fabrizio Bensch

By Alexander Hübner and Matthias Inverardi

DUESSELDORF (Reuters) -Europe’s biggest real estate takeover could fall through, at least for now, after Germany’s Vonovia warned on Friday that it likely had not secured the backing of enough shareholders in its target Deutsche Wohnen (OTC:).

The deadline for Deutsche Wohnen shareholders to tender stock passed at midnight on Wednesday and Vonovia needs to collect at least 50% of its rival’s shares for the deal to proceed.

Vonovia said the latest tally indicated it had only received commitments for 47.6%. The deal would create a $22 billion property giant with 550,000 apartments.

“A combination of the two companies makes a lot of sense,” Vonovia Chief Executive Rolf Buch said in a statement. “Unfortunately, an insufficient proportion of the current shareholders of Deutsche Wohnen have turned in their shares.”

The offer price of 52 euros per share was fair, Vonovia said, though it would now “carefully consider all options available to it”, including the launch of another public offer that could potentially sweeten the deal.

Vonovia said that the tendered shares were still being counted and a result was expected on Monday.

Buch failed in his 2016 attempt to take over Deutsche Wohnen. But unlike last time, Deutsche Wohnen’s CEO favours the deal.

Earlier on Friday, two sources familiar with the matter told Reuters the deal was at risk of not reaching the 50% target.

One of the people familiar with the matter said some hedge funds, which hold about a third of Deutsche Wohnen’s stock, may not have tendered shares in the hope a deal would eventually go through at a higher price.

Complicating matters, a number of hedge funds and index funds that hold Deutsche Wohnen shares are only able to trade in their shares once the minimum acceptance quota has been reached, Vonovia said.

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