Germany’s two largest listed residential landlords, Vonovia and Deutsche Wohnen, are to combine in an €18bn all-cash deal that will create a company with more than 500,000 flats across the country.
Vonovia is offering Deutsche Wohnen shareholders €53 a share, including an expected €1 dividend. That is a 25 per cent premium to Deutsche Wohnen’s average share price over the past three months.
The deal will give shareholders “long-term strategic benefits”, Thomas Rothaeusler, a real estate analyst at Jefferies, noted.
Shares in Deutsche Wohnen shot up more than 15 per cent to almost €52 on Tuesday while Vonovia’s stock lost more than 4 per cent to €49.92.
The transaction is a rare example of two listed companies on Germany’s benchmark Dax index combining. Recent instances include the ill-fated takeover of Dresdner Bank by Allianz and Bayer’s acquisition of pharmaceutical group Schering two decades ago.
Vonovia said the deal was expected to generate €105m in cost synergies “from the joint management and the regionally complementary portfolios”, Vonovia said. The combined company would not cut staff numbers before the end of next year, the groups added.
“Now is the right moment to combine the proven performance and strengths of both companies,” said Deutsche Wohnen chief executive Michael Zahn, who fought off a hostile €14bn cash-and-share offer by Vonovia five years ago.
Both Zahn and Deutsche Wohnen finance director Philip Grosse will join the enlarged group’s executive board.
Vonovia and Deutsche Wohnen are willing to sell a significant number of residential units to the state of Berlin as part of a proposed “pact” with regional politicians to help the housing market in Berlin.
Vonovia chief executive Rolf Buch, who has been on a long-running acquisition spree, said the deal “gives us the opportunity to effectively tackle” the challenge to increase the supply of affordable and senior-friendly apartments, and to refurbish houses to make them more ecological.

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