European Event-Driven Analyst

Jesus Rodriguez Aguilar

Jesús is an Insight Provider (Event-driven) on the Smartkarma network, where he looks across sectors at opportunities arising from securities mispricing (both credit and equity), share classes, bid announcements, prospective bids, and special situations. He has served as Economic and Business Advisor at the Spanish Congress in Madrid. Prior to that, he has worked in the City of London: as a Credit Analyst at Bloomberg; Event-driven associate at former boutique European Research; and doubled as Special Situations and Equity-linked VP (convertible bonds) at Merrill Lynch. Jesús has an MBA from the London Business School, a BA (Hons.) degree in Economics from the Complutense University in Madrid, and a BA (Hons.) in Law from U.N.E.D., also in Madrid.

Vonovia/Deutsche Wohnen: Third Time Around

Vonovia/Deutsche Wohnen: Update and Change of Recommendation

Event-Driven

As of 24 September, the total number of shares tendered, plus the Deutsche Wohnen Shares directly held by the Vonovia, plus the Deutsche Wohnen Shares in respect of which Vonovia was directly and unconditionally entitled to an immediate transfer, and plus the financial instruments relating to the acquisition of Deutsche Wohnen shares directly held by Vonovia amounts to 181,711,364 Deutsche Wohnen shares. This corresponds to approximately 50.49% of the share capital and the voting rights of Deutsche Wohnen.
Vonovia began this round in mid-June, when it launched its first friendly bid to win its competitor. At the time, the cash offer made was €52/share, in addition to the right to cash in the expected dividend of €1.03/share. However, this attempt did not prosper as it just reached a 47.6% support, below the 50% minimum acceptance threshold.
In its second offer this summer, Vonovia raised to €53/share to woo Deutsche Wohnen shareholders. Thus, Vonovia valued its rival at €19.1 bn vs. €18 bn at the beginning of summer.
The resulting merger of the two German real estate companies will result in a conglomerate owning over 500,000 homes on the European market, some 350,000 from Vonovia divided between Germany, Austria and Sweden; and 160,000 from Deutsche Wohnen, which concentrates a good part of its properties in Berlin. The joint valuation of their portfolios reaches €89,000 mn.
Berlin votes in favor of expropriating 240,000 homes in the hands of large companies. Although the vote is non-binding and seems unlikely to materialise, at least via expropriations, pressure is mounting on the Berlin local government to control rents. I anticipate that Berlin local government will continue to buy homes from large owners, but at market prices. The latest purchase was of 14,750 homes from both Vonovia and Deutsche Wohnen for €2,460 mn.
Deutsche Wohnen reported good operational results: FFO I increased by 2% and EPRA NTA increased by 1.4%. Market rents up 6% in Berlin, 35.6% gains on privatisations. The offer price is above the EPRA NTA per share (€52.67/share) as reported on 30 June.
Third time around Vonovia has secured the acquisition. Acceptance period ends on 4 October. Gross spread as of 28 September is 0.03%. The deal should close by mid-October. Recommendation is tender.

As of 24 September, the total number of shares tendered, plus the Deutsche Wohnen Shares directly held by the Vonovia, plus the Deutsche Wohnen Shares in respect of which Vonovia was directly and unconditionally entitled to an immediate transfer, and plus the financial instruments relating to the acquisition of Deutsche Wohnen shares directly held by Vonovia amounts to 181,711,364 Deutsche Wohnen shares. This corresponds to approximately 50.49% of the share capital and the voting rights of Deutsche Wohnen.
Vonovia began this round in mid-June, when it launched its first friendly bid to win its competitor. At the time, the cash offer made was €52/share, in addition to the right to cash in the expected dividend of €1.03/share. However, this attempt did not prosper as it just reached a 47.6% support, below the 50% minimum acceptance threshold.
In its second offer this summer, Vonovia raised to €53/share to woo Deutsche Wohnen shareholders. Thus, Vonovia valued its rival at €19.1 bn vs. €18 bn at the beginning of summer.
The resulting merger of the two German real estate companies will result in a conglomerate owning over 500,000 homes on the European market, some 350,000 from Vonovia divided between Germany, Austria and Sweden; and 160,000 from Deutsche Wohnen, which concentrates a good part of its properties in Berlin. The joint valuation of their portfolios reaches €89,000 mn.
Berlin votes in favor of expropriating 240,000 homes in the hands of large companies. Although the vote is non-binding and seems unlikely to materialise, at least via expropriations, pressure is mounting on the Berlin local government to control rents. I anticipate that Berlin local government will continue to buy homes from large owners, but at market prices. The latest purchase was of 14,750 homes from both Vonovia and Deutsche Wohnen for €2,460 mn.
Deutsche Wohnen reported good operational results: FFO I increased by 2% and EPRA NTA increased by 1.4%. Market rents up 6% in Berlin, 35.6% gains on privatisations. The offer price is above the EPRA NTA per share (€52.67/share) as reported on 30 June.
Third time around Vonovia has secured the acquisition. Acceptance period ends on 4 October. Gross spread as of 28 September is 0.03%. The deal should close by mid-October. Recommendation is tender.

Vonovia Has Already 50.49% Of​Deutsche Wohnen

Deutsche Wohnen

Vonovia Has Already 50.49% Of​Deutsche Wohnen

Vonovia Has Already 50.49% OfDeutsche Wohnen