German real estate giant to buy smaller rival Gagfah for $4.9 bn

01 Dec 2014

Deutsche Annington  Immobilien SE, Germany's biggest real estate company, today struck a deal to buy its smaller rival Gagfah S.A. for €3.9 billion ($4.9 billion) in cash and stock.

Under the terms of the deal agreed by the board of both companies, Deutsche Annington will offer five new Annington shares and €122.52 in cash for every 14 Gagfah shares.

Based on Deutsche Annington's closing stock price on Friday, the combined cash and exchange offer values Gagfah at €18 per share, representing a 16.1 per cent premium to its Friday closing price.

The companies expect to achieve about €84 million in annual cost savings and the deal is subject to a minimum of 50 per cent of Gagfah shareholders submitting their shares to the offer.

Luxembourg-based Gagfah owns a portfolio of more than 145,000 units in Germany, mainly in Dresden and Berlin.

The merger will create Germany's largest residential landlord and one of the largest real estate companies in Europe with approximately 350,000 residential units and a combined portfolio value of approximately €21 billion.

Deutsche Annington is Germany's largest private-sector residential real estate company both in terms of portfolio value and the number of units owned.

As at 30 September, the Düsseldorf-based company owned some 184,000 residential units worth a total of € 11.4 billion.