Not every rivalry has to last forever; some bitter opponents even develop into business friends if the circumstances are right.
Rolf Buch, CEO of the Bochum housing company Vonovia, and Michael Zahn, head of the Berlin real estate group Deutsche Wohnen, wrestled hard over the Whitsun days, but they acted quite tame when they presented the merger plans.
"Michael can answer that better," said Buch in the telephone press conference on Tuesday, consideration and giving way was the order of the day.
Jonas Jansen
Business correspondent in Düsseldorf.
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Julia Löhr
Business correspondent in Berlin.
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In 2015 it sounded very different when Vonovia wanted to swallow the competitor in a hostile takeover for 14 billion euros.
Zahn found the purchase price too low at the time, the offer was "destructive" and the synergy potential of 80 million euros "impossible".
The shareholders followed the reading and served Vonovia less than a third of their shares.
Vonovia's renewed offer to pay more than 18 billion euros for the shares in Deutsche Wohnen is now well received by the management and supervisory boards of the Berlin housing group.
They expressly recommend the transaction to their shareholders.
Takeover attempts "not comparable"
The earlier takeover attempts are not comparable with today's, argues Zahn. “The companies have moved closer to each other strategically,” said the Deutsche Wohnen boss in the conference call. Like the Berlin group, Vonovia has grown through acquisitions in recent years. "We have shown that our business can generate economies of scale," said Buch. That in turn should then also be reflected in the costs, now even synergies of 105 million euros are no longer impossible, but firmly planned. With better purchasing, simpler IT systems and so on, Vonovia recently demonstrated this with an acquisition in Sweden, and the employees should not be hit by downsizing until the end of 2023.
Buch will then hold the chairmanship of the joint venture, which will be called Vonovia, and Zahn will be his deputy.
Zahn brings his chief financial officer with him, and Vonovia's chief financial officer is to be given a newly created board department for innovation and digitization.
Unpopular with Berliners
A merger of DAX companies is rare, and it is even more rare that the CEOs sit down on the stage with district politicians shortly after their plans have been announced. However, the takeover of Deutsche Wohnen by its competitor Vonovia is an exception in several respects: in the middle of the election campaign, the companies burst into their plans, and Berlin is an important arena, which, because of the rent cap, is the cause of the housing debate like no other city shapes. Deutsche Wohnen has three quarters of its apartments in Berlin; in the capital, the group is unpopular with many residents. "The merger certainly has nothing to do with expropriation," said Zahn on Tuesday, referring to the collection of signatures from critics of the housing corporations in Berlin.The activists' polemics have nothing to do with the rule of law, said the Deutsche Wohnen boss, who is known for not being particularly empathetic with his critics, even at panel discussions. Nevertheless, it is now the task to rebuild lost trust in the businesses of the housing construction companies.
While Vonovia immediately announced after the ruling by the Federal Constitutional Court on the rent cap, that it would not demand the rents due to them, Deutsche Wohnen insisted on their rights.
In the past few months, Buch has tried to act as a mediator in the tense discussion.
"We are aware that we have a great responsibility there," said Buch.
"We have to take the tenants' fears and worries away," said Zahn, who has been running the real estate company since 2008.
Two housing groups in the Dax
Zahn, who was born in 1963, has known Berlin for a long time. After studying economics in Freiburg, he gained a professional foothold there in the early 1990s. His first apartment was an old building in Kreuzberg's Oranienkiez, 80 square meters, which he shared with a friend. In 1997, Zahn hired the state-owned housing association Gehag, which was privatized shortly afterwards and ended up with Deutsche Wohnen via detours. Zahn continued to expand its portfolio there. He also failed with takeovers such as the North Rhine-Westphalian real estate group LEG, but he led his group into the Dax.
Buch, who, unlike Zahn, does not come from the real estate industry as a mechanical engineer, had already shown the rise in the Dax. As head of the Bertelsmann subsidiary Arvato, Buch moved to the top of what was then Deutsche Annington in 2013, which was renamed Vonovia two years later and rose to the top tier of the stock market. The now 56-year-old manager had learned his lesson with the failed hostile takeover. For some time now, Buch has tried the cooperative approach rather than the crowbar. The Vonovia boss was also tame when dealing with his customers, whether it was about rent increases or energy-efficient renovations, especially in the Corona year 2020. The manager is aware of the tense mood during the election campaign, and reluctance was part of his strategy. The takeover is all the more surprising.