Vonovia makes second attempt to acquire rival Deutsche Wohnen

Berlin

GERMAN residential property heavyweight Vonovia is considering making a fresh attempt to acquire rival Deutsche Wohnen, in a deal that could create a real estate giant valued at about 37 billion euros (S$56.7 billion), people with knowledge of the matter said.

Vonovia is working with advisers to explore the feasibility of a transaction, which would need to be friendly and overcome political scrutiny.

The timing of any approach is likely to come after the novel coronavirus pandemic has eased, the sources said, asking not to be identified because the information is private. Germany is gradually reopening businesses this month and next.

Deutsche Wohnen has a market capitalisation of about 12.7 billion euros (S$19.5 billion). Vonovia, which failed in its previous bid to acquire the company four years ago, is valued at about 24.3 billion euros.

Vonovia would only pursue a deal with the blessing of Deutsche Wohnen management and Berlin's powerful regional government, the people said, adding that it would also need to overcome potential taxation hurdles to a combination.

No final decisions have been made, and there is no certainty that the deliberations will lead to a formal offer. A representative for Vonovia would only say that acquisitions are part of the company's strategy, declining to comment on any specific transactions.

The housing crunch in Germany is causing a shake-up in the country's real-estate market. ADO Properties completed its takeover of Adler Real Estate earlier this month, part of a bid to challenge Vonovia and Deutsche Wohnen by bulking up.

Last November, Aroundtown agreed to buy TLG Immobilien for 3.1 billion euros in stock to create Germany's biggest commercial landlord.

Vonovia dropped its previous pursuit of Deutsche Wohnen in February 2016 after failing to get enough investors to accept its bid. Deutsche Wohnen at the time called the bid hostile and not in the best interests of shareholders.

Any formal approach by Vonovia would come at a time of uncertainty over housing policies that have weighed on the valuation of Berlin-focused Deutsche Wohnen. BLOOMBERG