German property giants announce 19-bn-euro merger

BERLIN: Germany's top property group Vonovia announced Monday plans for a 19-billion euro merger with rival Deutsche Wohnen to form a giant in the sector.

"In order to tackle both the housing shortage and climate change more robustly and efficiently, Vonovia and Deutsche Wohnen are joining forces," said a statement from the company.

The proposed deal comes after two previous attempts failed to come off, the last having been rejected by Deutsche Wohnen in 2016.

But this latest offer prices Deutsche Wohnen shares at well above their current market value, which stood at 44.99 euros on close of trade Friday on the Frankfurt exchange.

The markets in Germany are closed for a public holiday Monday.

Deutsche Wohnen shareholders will be offered 53.03 euros per share: 52 in cash and the rest as the company's dividend for the 2020 financial year, said the statement.

The previous purchase offer in 2016 saw Deutsche Wohnen oppose the merger, saying the proposed price was too low.

In Germany, where around 85 percent of residents are renters, Deutsche Wohnen and Vonovia play a premier role in the housing sector.

The merger will give birth to a giant of more than 500,000 homes.

The two promised to work closely with political decision makers on the sensitive issue of housing supply and prices.

They pledged to limit rent increases until 2026 and to build new apartments in the capital Berlin, which has been hit for years by runaway rent and a lack of affordable housing.