A wave of takeovers that’s transformed Germany’s rental property industry is reaching its climax.

The latest record-smashing bid is Vonovia SE’s offer to buy Deutsche Wohnen AG for almost 10 billion euros ($11.4 billion). The move by Germany’s biggest residential landlord to take over its closest competitor could thwart Deutsche Wohnen’s own bid for property owner LEG Immobilien AG.

“It’s logical that we’re having a showdown,” said Karsten Nemecek, managing director for corporate finance and valuation at broker Savills Plc. “It’s the last chance for both sides to make a big move as the market consolidates.”

Vonovia and Deutsche Wohnen are battling in a market that has been transformed by a spate of acquisitions spurred by low borrowing costs and rising rents. Apartments worth almost 18.4 billion euros were snapped up in the first nine months, 81 percent more than a year earlier, according to data compiled by Savills. The total value could rise to 30 billion euros by the end of the year.

Deutsche Wohnen showed that it’s still in the fight Wednesday, rejecting Vonovia’s offer as "inadequate” and saying it’s committed to its bid for LEG. Deutsche Wohnen shareholders are due to vote on the LEG takeover on Oct. 28. Vonovia said its bid is only valid if the LEG takeover fails.

Shares Soar

The breakneck pace of property accumulation has lifted share prices at the biggest companies even though deals were financed with record levels of debt and equity sales.

Vonovia’s rise has been meteoric. The company formerly known as Deutsche Annington Immobilien SE, came close to bankruptcy in 2011 only to bounce back with a string of deals culminating in the takeover of Gagfah SA for 3.9 billion euros and Suedewo Group for 1.9 billion euros. Last month Vonovia became the first residential landlord to enter a benchmark European stock index when it joined the DAX.

Vonovia has 370,000 apartments across Germany, and a tie-up with Deutsche Wohnen would give it another 144,000 homes. Most of those are in Berlin, one of Germany’s best performing property markets during the past decade.

The deal makes sense “from a strategic point of view,” Hans Op ’t Veld, head of listed real estate companies at Dutch pension fund PGGM, said in an e-mail. PGGM owns shares in both Vonovia and Deutsche Wohnen.

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