GSW Jumps as Deutsche Wohnen Makes All-Share Takeover Bid

GSW Immobilien AG surged to the highest price since its 2011 initial public offering after Deutsche Wohnen AG made an all-share bid for the company that would create the second-largest owner of German homes.

GSW climbed as much as 10 percent to 34.64 euros and was up 7.2 percent at 2:05 P.m. in Frankfurt, giving the Berlin-based company a market value of 1.7 billion euros ($2.28 billion). Trading volume was more than five times the three-month daily average.

The combined company will own about 150,000 apartments valued at 8.5 billion euros, Deutsche Wohnen said in a statement today. About 54 percent of Deutsche Wohnen’s properties and 93 percent of GSW’s holdings are located in the German capital.

“We would also see the potential to create synergies as the portfolios of both companies fit well,” Kai Klose and Estelle Weingrod, London-based analysts at Berenberg Bank, said in a note today. The offer implies a premium of 15 percent to the EPRA net asset value of GSW, a standard measure set by the European Public Real Estate Association, the analysts said.

Deutsche Wohnen offered 51 new shares for every 20 GSW shares, or about 1.75 billion euros, based on the three-month volume-weighted average share price of GSW, according to the statement.

GSW’s shareholders will own about 43 percent of the combined company if they all accept the offer, Berlin-based Deutsche Wohnen said. GSW is evaluating the bid, the residential landlord said in a separate statement today.

Berlin Premium

“The combined portfolio will have a stronger focus on Berlin, where we would regard GSW as the clear market leader, which may justify even a strategic premium,” the Berenberg analysts said.

Deutsche Wohnen, which has 90,000 apartments across Germany, said in 2011 that it wanted to buy its rival. GSW has been without a chief executive officer since July, when Bernd Kottmann resigned following investor complaints about the way he was hired. The departure fueled speculation that GSW might be taken over by a competitor.

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