Deutsche Wohnen bids $2.3 bln for property rival GSW

Tue Aug 20, 2013 6:40am EDT
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By Christiaan Hetzner and Peter Dinkloh

FRANKFURT (Reuters) - Deutsche Wohnen (DWNG.DE: Quote) offered to buy rival property group GSW Immobilien GIBG.DE for 1.75 billion euros ($2.3 billion) to expand in Berlin's booming real-estate market, as a tentative pick-up in Europe's economy attracts international investors.

Deutsche Wohnen plans to fund the bid, which would be the second-biggest residential real estate deal in Germany in the past five years, by issuing 135 million new shares.

The group said on Tuesday it would offer 51 of its shares for every 20 shares in GSW, which would give GSW investors around 43 percent of the enlarged company.

Deutsche Wohnen said the offer represented a premium of 15.4 percent over the volume-weighted average share price of GSW over the past three months.

GSW said it would study the offer before deciding how to proceed.

In a sign that the European market is becoming attractive after years of crisis that hammered property values, sources told Reuters on Monday that the real estate arm of Blackstone (BX.N: Quote), one of the world's biggest hedge fund investors, was targeting up to $5 billion for a new fund that would invest in the region.

Last week, second-quarter growth data showed the euro zone was emerging from a 1-1/2 year recession, with the economies of both Germany and France expanding faster than expected.

The deal would bring Deutsche Wohnen's portfolio of flats to 147,000, with 108,000 of these in Berlin, where rents surged 40 percent between 2007 and 2012, according to research institute Empirica. Deutsche Annington ANNGn.DE, Germany's largest real estate firm, has 179,000 apartments.   Continued...