Vonovia agrees €18bn takeover of Deutsche Wohnen

German residential property company Vonovia has agreed to take over rival Deutsche Wohnen in a €18bn deal.

Under the terms of the acquisition, Vonovia will pay €0.52 a share to Wohnen shareholders, who will retain the rights to a €1.03 per share dividend. The price represents an 18% premium to the closing share price of Wohnen on Friday.

Vonovia chief executive Rolf Buch said: "Social responsibility and economic stability are the foundation of our work, because housing is one of people’s fundamental needs. At the same time, the housing market is facing major challenges, especially in the German capital: affordable and senior-friendly apartments are in short supply, many buildings need to be refurbished to improve energy efficiency, and clearly there is a need to build more affordable new housing.

"The combination with Deutsche Wohnen now gives us the opportunity to effectively tackle these challenges."

Vonovia expects to see cost savings of €105m a year from the deal. The full realisation of potential cost savings is expected by 2024.

Berenberg said: "We think that the majority of Deutsche Wohnen’s shareholders will accept the offer as it is reasonably attractive and cash offers are generally well received.

"As residential real estate offers substantial operational synergies, we regard the envisaged cost advantages as achievable and think that Vonovia’s development pipeline will be strengthened by Deutsche Wohnen’s development activities."

At 1220 BST, Vonovia shares were down 4.4% at €49.81 while Deutsche Wohnen shares were 16% higher at €52.04.