LEG Share Slump Spells Bad News for Deal With Deutsche Wohnen

Deutsche Wohnen AG shareholders are likely to reject a plan to buy LEG Immobilien AG next week, judging by the performance of LEG’s shares.

LEG has lost more than 6 percent of its market value since Vonovia SE sought to torpedo the deal by making a hostile bid for Deutsche Wohnen on Oct. 14. The shares are trading at about 68.29 euros in Frankfurt, 14 percent less than the current value of Deutsche Wohnen’s all-share bid of about 79.5 euros.

“It’s clear that investors are pricing in the fact that the takeover of LEG won’t go ahead,” said Thomas Neuhold, a Vienna-based analyst at Kepler Cheuvreux. “Vonovia’s bid is attractive because the company’s properties are all over Germany, rather than being predominantly in Berlin.” Neuhold has a buy rating on all three stocks.

Deutsche Wohnen’s bid for LEG was the biggest in Germany’s residential-property industry until Vonovia entered the fray. Vonovia’s offer totals almost 10 billion euros ($11 billion), excluding debt, the company said when it announced the deal.

Deutsche Wohnen shareholders are scheduled to vote on the LEG bid on Oct. 28. The company will hold a conference call with analysts and investors Thursday. A Deutsche Wohnen spokesman declined to say what will be discussed on the call or comment on the offer for LEG.

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