German real-estate firm Deutsche Wohnen rejects $11.3-bn takeover bid from Vonovia

German real-estate company Deutsche Wohnen AG rejected a €9.92 billion ($11.3 billion) takeover offer from its larger rival Vonovia SE and said it stands by its own takeover bid for apartment owner LEG Immobilien AG.

Vonovia, which offered to buy Deutsche Wohnen if the company's shareholders reject the planned takeover of LEG Immobilien, has offered to pay a total of €25.86 through a mix of share and stock, or €9.92 billion excluding debt.

The total value of the deal is around €14 billion including debt.

The offer price of €25.86 is 9.8 per cent higher than Deutsche Wohnen's share price on 8 October, the day before media reports of an impending bid surfaced.

Vonovia expects to generate around €84-million in pretax annual cost savings if the Deutsche Wohnen deal is completed.

Deutsche Wohnen rejected the offer by saying that the premium ''does not reflect in any way the potential in NAV growth and the high quality of Deutsche Wohnen's real estate portfolio,'' and remains committed to its planned €7.6 billion acquisition of LEG.

However, Influential shareholder adviser Institutional Shareholder Services Inc. today withdrew its support for Deutsche Wohnen's offer for LEG, and instead supported the €14 billion bid from Vonovia.

Deutsche Wohnen's is Germany's second-largest real estate companies with a business focus on managing and developing residential properties in five federal German states: Berlin; Brandenburg; Saxony; Lower Saxony, and Rhineland-Palatinate.

Its portfolio comprises of a total of 144,000 units, of which 141,900 residential units and 2,100 commercial units.

Vonovia is the largest residential real estate property developer in Germany. The Bochum–based company operates through two segments, rental and sales.

As of 31 December 2014, the company managed 203,028 own residential units; 49,508 garages and parking spaces; and 1,471 commercial units, as well as managed 29,218 residential units for other owners.