German landlord Deutsche Wohnen AG failed to gain control of Conwert Immobilien Invest SE after shareholders with less than half of the Austrian company’s stock approved a 980 million-euro ($1 billion) takeover bid.
Deutsche Wohnen had offered to buy Conwert shares for 11.50 euros each. Deutsche Wohnen had to secure at least 50 percent and one share for the bid to succeed, the Berlin-based company said in a statement on Wednesday.
The acquisition would have cemented Deutsche Wohnen’s position as Germany’s second-biggest residential landlord and helped it gain ground on its biggest German competitor, Deutsche Annington Immobilien SE, which owns more than twice as many homes. The deal would have also extended Deutsche Wohnen’s reach into Austria.
“We’ve always said Conwert is an option for us, never a strategic asset,” Deutsche Wohnen Chief Executive Officer Michael Zahn said in an e-mail. “We’re set up very well and will continue to pursue our strategy in a responsible and sustainable manner.”
Deutsche Wohnen’s bid for Conwert, announced in February, sparked a debate between shareholders who said the price was too low and others who said a takeover would save the Austrian company from poor management. Petrus Advisers LLP, which owns about 6.7 percent, is among the investors that have said publicly they’re opposed to the deal.
Deutsche Wohnen owns about 147,000 apartments, mostly in Berlin and Frankfurt, while Deutsche Annington has 350,000.
Germany’s residential-property companies, taking advantage of favorable financing conditions, are expanding at a record pace. Low interest rates make it cheaper for landlords to take out loans, and rising stock prices are boosting shareholder support for deals.
Residential properties valued at 27 billion euros changed hands in the past two years, compared with 18 billion euros in the two years before that, according to data compiled by Jones Lang LaSalle Inc.
The rejection represents a “mandate from shareholders” to improve profitability and continue the previously announced effort to reduce financing costs, Conwert said in a statement on Wednesday. Nevertheless, merger and acquisition activity will probably continue, the company said.
“The management anticipates a further consolidation in the property sector in Germany and Austria,” according to the statement. “The administrative board and executive directors will strive to achieve the best-possible results for shareholders in the course of this consolidation process.”