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Vonovia, BUWOG AG agree to merge in €5.2B deal

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Vonovia, BUWOG AG agree to merge in €5.2B deal

Vonovia SE agreed to buy the outstanding shares of BUWOG AG in a deal valuing the latter at about €5.2 billion.

Vonovia is offering to purchase for cash all of BUWOG's outstanding shares at €29.05 per share, which represents an 18.1% premium over BUWOG's Dec. 15 closing price on the Vienna Stock Exchange, Vonovia said in a release.

The cash offer also encompasses BUWOG's convertible bonds, which Vonovia is offering to purchase for cash at €115,753.65 for each convertible bond with a nominal value of €100,000 during the initial acceptance period and at a reduced offer price during a three-month additional acceptance period.

In a separate release, BUWOG said its supervisory and management boards support the takeover offer.

The deal will add Austria-based BUWOG's residential portfolio of about 49,000 apartments, more than half of which are in Germany, to Vonovia's roughly 350,000 apartments.

Germany-based Vonovia intends to finance the acquisition via debt capital and expects to realize roughly €30 million in annual cost benefits following the integration. Vonovia also expects the deal to positively affect its per-share funds from operations 1 and adjusted NAV per share.

BUWOG CEO Daniel Riedl will be appointed to the management board of Vonovia where he will be responsible for the Austrian business as well as the development business segment. COO Herwig Teufelsdorfer will continue to lead the operational business in Austria, while Deputy CEO and CFO Andreas Segal will leave in the second half of 2018 after aiding with the transition. Vitus Eckert, chairman of the supervisory board of BUWOG, is expected to be a candidate for Vonovia's supervisory board.

In case of a successful takeover, BUWOG will convene an extraordinary general meeting to replace its supervisory board, while Vonovia will be given an opportunity to nominate new supervisory board members.

Vonovia intends to lead the Austria business from its new BUWOG headquarters at Rathausstraße 1 in Vienna, while its Berlin location will remain in lead for its development business segment.

The takeover offer is expected to be published in February 2018.

The deal is expected to be settled mid-March 2018 and is subject to 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.