After the embarrassment of the failed takeover, the two CEOs of Vonovia and Deutsche tried to dispel all doubts when they announced the next attempt at merger.

“We are still convinced that a combination of the two companies brings strategic, economic and housing policy advantages,” says Vonovia CEO Rolf Buch.

"We are also supported in this by important Vonovia and Deutsche Wohnen shareholders."

Jonas Jansen

Business correspondent in Düsseldorf.

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The companies agree that together they can cope with the “major challenges in the housing market”, namely climate protection, affordable housing and new construction, more forcefully.

According to Michael Zahn, CEO of Deutsche Wohnen, many shareholders “regretted” that the transaction was unsuccessful.

You should now have the chance to agree to the merger on better terms. 

The new approach must now work

The last takeover offer on June 23 was unsuccessful;

with an acceptance rate of 47.62 percent, the required minimum acceptance rate of 50 percent was missed.

It was the second time that a takeover offer from Vonovia failed.

In 2016, Buch had planned a merger, at that time still against the will of the management board of Deutsche Wohnen, but it had failed due to the shareholders of the competitor.

With the renewed offer, which was now backed by the entire management board and supervisory board of Deutsche Wohnen, all those involved were very sure that it would work.

Hedge funds in particular hesitated too long to offer their shares - which is why the offer fell through. 

This is uncomfortable for the two CEOs, as they confidently advertised the merger in advance.

The renewed run-up has to work, especially for Buch - otherwise it would be hard to keep.

But the banks involved were also among the losers in the first attempt;

after all, they are paid based on success. 

Hardly anything changes in the framework of the new experiment: 50 percent continue to be the minimum acceptance threshold, and the companies in the merged group expect annual savings of 105 million euros.

And the state of Berlin should still be able to buy 20,000 apartments from the holdings of the two groups in order to pacify the housing debate in the capital. 

53 instead of 52 euros

The takeover will be more expensive for Vonovia: The company is now offering 53 euros per share, which is one euro more than before. The federal financial institution Bafin still has to exempt companies from the one-year blocking period that applies after a failed takeover attempt, then Vonovia wants to present the new offer. The Bundeskartellamt had already approved the merger at the previous attempt.

The offer price includes a premium of 24.9 percent on the average price of Deutsche Wohnen from the last three months up to May 21. The takeover, which was originally supposed to cost 18 billion euros, will be a few hundred million euros more expensive, according to the housing company's documents for investors: With an acceptance rate of 90 percent, which would correspond to a purchase of 214 million Deutsche Wohnen shares Vonovia will pay 11.3 billion euros for this. For each share, 1 euro more is due, for a total of 214 million euros. There are also transaction costs of 600 million euros.

Vonovia has already secured 29.99 percent of the shares in Deutsche Wohnen through the failed takeover attempt, mostly at a price of 52 euros per share.

The deal included the takeover of 3.53 percent of Deutsche Wohnen's own shares, which were only sold because the previous deal had failed. 

The tax-saving model remains the same

Of course, the time of the takeover is now also being pushed back; the companies are expecting the deal to be concluded in the fourth quarter.

Together Vonovia and Deutsche would then have more than 550,000 apartments with a property value of almost 90 billion euros. 

Nothing is likely to change in the previously criticized tax-saving model in the takeover. Vonovia gets around paying real estate transfer tax on the billion dollar business. The Federal Council had tightened a law on July 1, according to which buyers of real estate companies are allowed to take over a maximum of 90 instead of the previous 95 percent of the shares without having to pay real estate transfer tax. Vonovia is still planning to do this - with the last attempt there was a so-called “third-party bank agreement” with the French bank Société Générale, which takes over all shares offered that exceed a possible 90 percent share. 

Green finance politician Lisa Paus described the change after the takeover plans became known as a “messed up reform”. Based on a real estate transfer tax of 5 to 6.5 percent, she had already assumed a lost tax payment of around 1 billion euros in the 18 billion euro takeover. The federal states are entitled to the revenue.