German residential property giant Vonovia has agreed to buy Austrian peer Buwog in a cash deal that values Buwog at up to €5.2 billion, the two companies said on Monday.
Vonovia’s planned offer represents a premium of 18.1% on the closing price of Buwog shares on Friday, December 15, 2017.
“Shareholders are to be offered EUR 29.05 in cash per Buwog share,” said Vonovia.
“This cash offer, which is expected to be published at the beginning of February 2018, values Buwog at around EUR 5.2bn (enterprise value), taking into account potential newly issued shares from a conversion of the convertible bonds issued by Buwog.
“The aim is to combine Vonovia’s residential portfolio (around 350,000 apartments) with Buwog’s residential portfolio (around 49,000 apartments).
“Around 55% of apartments owned by Buwog are located in Germany, for example in the dynamically growing cities of Berlin and Hamburg.
“Buwog’s apartments in Austria are located in regional centres such as Graz, Klagenfurt, Salzburg and Villach, as well as at its Vienna base, where Vonovia is already well-represented following the acquisition of conwert.
“With a total of 24,000 apartments in the country, this would make Austria a sustainable part of Vonovia’s apartment portfolio.”
Rolf Buch, CEO of Vonovia SE, says: “We are very pleased that our proposal has been positively received by the boards of Buwog.
“Buwog is an excellent fit for our company: the housing stocks complement each other perfectly in Germany and Austria.
“Buwog also has a leading position in the development sector. A merger of the two companies offers clear positives for tenants and shareholders of both companies.”
Daniel Riedl, CEO of Buwog AG, says: “Taking into account business models and portfolios, a merger of Buwog and Vonovia offers strategic advantages for both companies.
“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.”
Vonovia’s offer “will also be addressed to the holders of Buwog’s convertible bonds” who are to be offered €115,753.65 in cash for each convertible bond with a nominal value of €100,000 during the initial acceptance period and, in accordance with market practice, “a reduced offer price per convertible bond during the three-month additional acceptance period.”
Vonovia expects to finance the offer by debt capital.
Vonovia expects cost benefits of approximately €30 million per year, “which will arise from the joint management of both portfolios in Germany and Austria and are to be realized, for the most part, by the end of 2019.”
Buwog CEO Daniel Riedl is to be appointed to the management board of Vonovia and assume responsibility for the Austrian business as well as the development business segment.
It is also intended that Herwig Teufelsdorfer, Buwog COO, will continue to lead the operational business in Austria.
“The completion of the takeover offer will be subject to the statutory minimum acceptance threshold of 50% plus 1 share of all Buwog shares that are subject of the offer, merger clearance in Germany and Austria as well as other customary closing conditions, such as no material adverse changes at Buwog and capital market conditions, the details of which will be set out in the offer document,” said Vonovia.
“If successful, the takeover offer is expected to be settled mid-March 2018.”