The latest information on Deutsche Wohnen AG
Sign up for myFT Daily Digest to get the news of Deutsche Wohnen AG first.
U.S. hedge fund Davidson Kempner is seeking an injunction to prevent German residential landowner Deutsche Wohnen from raising capital, the “only purpose” of which is the proposed merger of € 18 billion by rival Vonovia. To help overcome shareholder resistance to.
The proposed transaction was not well supported by Deutsche Wohnen’s shareholders. Last month, Vonovia gain The first bid of € 52 per share in May was € 1 with a premium of 17% of the undisturbed share price. In mid-September it abandoned all offer terms.
The transaction will create a real estate giant with 500,000 owners. German apartment, Austria and Sweden are worth nearly 90 billion euros. The two companies said the partnership could save € 105 million annually.
Deutsche Wohnen has agreed to sell its treasury stock to Vonovia and is ready to issue about 5% worth of new shares. This is what Vonovia buys and sets the deal apart.
Davidson Kempner, who said he holds a 3.2% stake in Deutsche Wohnen, said in a statement that the company’s pledge to issue new shares and sell them to Vonovia was “unprecedented and legally questionable. “It raises serious corporate governance concerns,” he said. ..
In addition, potential conflicts of interest have been pointed out as Deutsche Wohnen’s CEO Michael Zahn will become Deputy CEO of the expanded company and Treasury Officer Phillip Gross will become the new CEO. I did.
Deutsche Wohnen dismissed the criticism. In a statement, the company’s claim that management is facing a conflict of interest is “legally and practically correct,” as it is “customary” for executives of the target company to join the expanded group. No, “he said.
He added that the promise to sell treasury stock to Vonovia and start a capital increase is in line with German law. “There are very good reasons to grant these shares to Vonovia, excluding the preemptive right, the overall benefit of implementing a business combination in the best interests of Deutsche Wohnen. “
Two of Germany’s largest long-term asset managers, with 1.5% of Deutsche Wohnen, also expressed concern. “From a governance perspective, we are very critical of the capital increase,” Ingo Speich, Head of Sustainability and Corporate Governance at Deka, told the Financial Times. “Such behavior should not set a precedent for future M & A transactions in Germany.”
“I don’t know if Deutsche Wohnen’s management is still acting in the interests of shareholders,” said Michael Muders, Union Investment’s fund manager. Earlier, he stated that € 56 per share was a reasonable price.
He pointed out the fact that the transaction was rejected several times by shareholders. “Management doesn’t seem to care about this,” he said, adding that the reason for the need for a capital increase was “not intuitively clear.” “The debt level is low and Deutsche Wohnen doesn’t need cash.”
The first offer was accepted by 47.62% of Deutsche Wohnen’s investors. In July, it was slightly below the minimum acceptance standard of 50%. Vonovia states that it currently controls 48.45% of Target’s stock and exempts all minimum thresholds. Without Deutsche Wohnen’s capital increase, Vonovia may still struggle to become a majority owner.
Davidson Kempner accused Deutsche Wohnen’s management of seriously undermining shareholder rights and “their privilege to decide on a takeover offer.”
Hedge funds filed an injunction against a capital increase in a district court in Berlin 10 days ago, according to people familiar with the matter.
The court confirmed that Deutsche Wohnen had received an injunction, adding that he had to submit his legal opinion until Friday. The court may decide next week whether a hearing is needed or whether the matter can be decided immediately.
Vonovia declined to comment.
Deutsche Wohnen investor seeks injunction to block capital increase Source link Deutsche Wohnen investor seeks injunction to block capital increase
The post Deutsche Wohnen investor seeks injunction to block capital increase appeared first on California News Times.