Vonovia to Buy Austrian Developer Conwert for $1.9 Billion

Updated on
  • Conwert shares jump on deal, while Vonovia stock drops
  • Deal to generate 7 million euros of annual cost savings

Vonovia SE agreed to buy Austrian developer Conwert Immobilien Invest SE for about 1.7 billion euros ($1.9 billion), a fresh attempt to grow with an acquisition after a bid for its largest German competitor failed.

Vonovia offered 74 of its shares for every 149 Conwert shares, valuing each Conwert share at 17.58 euros, the Bochum, Germany-based real estate company said in a statement on Monday. That’s about 9 percent more than Conwert’s closing price on Friday. The deal is worth about 2.9 billion euros including debt, Vonovia Chief Executive Officer Rolf Buch said on a call with reporters.

Vonovia in February failed to get enough shares to acquire Deutsche Wohnen AG after a four-month takeover battle between Germany’s largest property companies. That would have been the biggest ever deal in the country’s real estate industry. Conwert shareholders last year rejected a 980 million-euro takeover bid by Deutsche Wohnen.

The acquisition of Conwert “further strengthens our market position in attractive regions in Germany,” as well as Vienna, Buch said in the statement. Conwert owns about 24,500 homes in Austria and Germany, while Vonovia has 340,000 across its home market.

Conwert climbed as much as 7.7 percent to 17.39 euros in Vienna trading, its highest intraday level since March 2007. Vonovia dropped 1.6 percent to 34.85 euros at 11:25 a.m. in Frankfurt, valuing the company at 16.2 billion euros.

Acquisition Spree

Vonovia has doubled the number of homes it owns since its initial public offering three years ago, funding purchases with low-cost debt and share sales. The company slowed acquisitions after its failed bid for Deutsche Wohnen.

The Conwert deal suggests Vonovia may be becoming more open-minded about expanding outside Germany, according to Peter Papadakos, an analyst at Green Street Advisors in London with a buy rating on the stock. “They may be more comfortable looking at other markets, like the Netherlands,” he said.

Conwert’s administrative board is in favor of a deal, according to the statement. Adler Real Estate AG, which owns about about 26 percent of Conwert’s share capital, agreed to sell its shares to Vonovia.

The transaction would generate annual operational cost savings of at least 7 million euros a year by the end of 2018, Vonovia said. It would add to the company’s net asset value per share and funds from operations.