M&A Activity • Dec 1, 2014
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Corporate | 1 December 2014 07:01
Deutsche Annington Immobilien SE: Deutsche Annington and GAGFAH decide to combine operations
Deutsche Annington Immobilien SE / Key word(s): Strategic Company Decision
01.12.2014 / 07:01
PRESS RELEASE
Deutsche Annington and GAGFAH decide to combine operations
– Key points of the combination: The creation of a national champion of European dimensions, with routes in North Rhine Westphalia and a combined portfolio comprising around 350,000 residential units.
– Annual synergies of around EUR 84m targeted from both operations and financing.
– Tenants will continue to benefit from affordable and energy-efficient housing catering to an aging society.
– Offer of EUR 122.52 in cash and 5 new Deutsche Annington shares for 14 GAGFAH shares at a combined value of EUR 18 per GAGFAH share. This equates to a premium of 16.1 percent on GAGFAH’s closing price as of 28 November 2014 and premium of 18.1 percent of the weighted average price over the past three months.
– Deutsche Annington and GAGFAH shareholders will benefit from the projected synergies of the combined company and the creation of an even more liquid and attractive equity investment on the financial markets.
– Rolf Buch to become CEO and Thomas Zinnöcker to become Deputy CEO of the combined business. The combination process will be jointly realised. Employees of both companies to benefit from a profitable and more competitive company.
Bochum, 1 December 2014 – The Executive and Supervisory Board of Deutsche Annington SE (‘Deutsche Annington’) and GAGFAH (‘GAGFAH’) have agreed to combine the two companies. The primary goal of combining Deutsche Annington and GAGFAH is to realise significant economies of scale. The combination of Deutsche Annington and GAGFAH will create a company with a portfolio comprising around 350,000 residential units. With a total portfolio value of around EUR 21bn, it will be the second largest listed real estate company in continental Europe.
The boards of both companies have agreed on the core principles of future cooperation in a Business Combination Agreement on the combination of Deutsche Annington Immobilien SE and GAGFAH S.A. The boards of GAGFAH will support Deutsche Annington’s offer and recommend that their shareholders accept it, subject to detailed review of the offer documents. Deutsche Annington has announced a voluntary public takeover offer for all GAGFAH shares to begin the combination process. Deutsche Annington offers EUR 122.52 in cash and 5 new Deutsche Annington shares for 14 GAGFAH shares at a combined value of EUR 18.00 per GAGFAH share based on Deutsche Annington’s closing price as of 28 November 2014. This equates to a premium of 16.1 percent on GAGFAH’s closing price as of 28 November 2014 and a premium of 18.1 percent of the weighted average price over the past three months.
Rolf Buch, CEO of Deutsche Annington said: ‘Getting the best of both worlds will be the outcome of this combination. We have agreed to conduct a fair process in the spirit of partnership. This combination is equally attractive for tenants and shareholders. We aim to create the leading company of European dimensions within the German housing market which will be more competitive and profitable, located in North-Rhine Westphalia.’
Economies of scale of around EUR 84m a year
Through the combination, both companies aim to achieve total cost benefits of around EUR 84m p.a., to be achieved within the next two years. These will be realised through synergies from financial and operational areas (e.g. from management, procurement and portfolio management as well as local service provision). Tenants of both companies will see advantages in the cost benefits and improved tenant services. GAGFAH’s investors will immediately benefit from the offer premium and both investor groups will see better total returns based on the future development of the stronger combined entity.
Among others, both companies have agreed to the following core principles of the combination:
– Rolf Buch will remain CEO and Thomas Zinnöcker will become the Deputy CEO. The Executive Board of the combined company will be expanded from three to five members; Gerald Klink will also join the board.
– The number of shareholder representatives in the Supervisory Board will be expanded to twelve members: Gerhard Zeiler, the Chairman of the GAGFAH Supervisory Board, will also join the board, along with two further members.
– The portfolios of the companies are complementary. Housing management will be carried out nationwide across six regions and will be managed in an equal manner.
– The Chairmen of both Supervisory Boards, Wulf Bernotat and Gerhard Zeiler, will both supervise the implementation of the Business Combination Agreement.
– An integration committee under the leadership of Rolf Buch and Thomas Zinnöcker is responsible for the implementation of the combination.
– The joint seat of the combined company will be close to the current headquarters.
– The joint Executive Board will in due course make a decision on the new name of the company.
Further details will be decided over the course of the coming months.
Rolf Buch: ‘With this combination, we aim to create an even more efficient combined company and continue our path as innovation leader in the German housing market. I will personally be responsible for ensuring that our philosophy of ‘growing value through tenant orientation’ will shape the combined company.’
Thomas Zinnöcker, CEO of GAGFAH GROUP commented: ‘GAGFAH has accomplished significant improvements in its operating and financial performance over the past 18 months which have been reflected in considerable value appreciation for our shareholders. The combination with Deutsche Annington will now offer the combined entity an opportunity for accelerated growth and further value creation while safeguarding the interests of our tenants, employees and other stakeholders. I can assure our tenants that there will be no changes to their contractual relationships with GAGFAH and that the combined entity will continue to act as a socially responsible landlord.’
Improved credit profile expected after combination
The formal offer is currently expected to be launched before Christmas and will run until around 21 January 2015. Among other conditions, the offer includes a minimum acceptance by shareholders of 50 percent of the total GAGFAH shares on a fully diluted basis. About 51 percent of the total offer consideration will be offered in new Deutsche Annington shares that will be created by a capital increase from its existing authorised capital. The remaining consideration will be provided in cash and is secured via a bridge facility, which is fully underwritten by JPMorgan. Deutsche Annington expects that the resulting capital structure of the combined group will enhance the current credit profile of the company and will be seen positively by Standard & Poors. The offer is subject to approval by the anti-trust authorities and dependent on various conditions outlined in the ad-hoc release also issued this morning at www.investoren.Deutsche-Annington.com
A more efficient company – joint effort to create a European leader
Over the past years, Deutsche Annington has adopted a strategy of leading through innovation, just as GAGFAH’s management has announced a series of important initiatives. Together, based on a shared and fully integrated IT platform and standardised processes, both companies intend to combine their strengths and build a market leader of European dimensions. In harnessing synergies in operational areas, the focus will not be job cuts. In areas where both Deutsche Annington and GAGFAH formerly did not have critical scale on their own, the enlarged scale will allow improved on-the-ground delivery of tenant-related services. Following a successful transaction, both companies intend to address potential overlaps in key business areas through a fair, transparent and cooperative integration process.
Similar roots, joint goals
Deutsche Annington has been listed since summer 2013, is a member of the German stock index M-Dax, was recently included in the MSCI Index and will be constituent of the Stoxx 600 from mid-December. Furthermore, Deutsche Annington’s weighing in the FTSE EPRA index is scheduled to increase 2.5 times (from 1.54% to 3.92%) on 19 December. GAGFAH has also been listed on the Stock Exchange since 2006 and has been part of the M-Dax since then. The two companies’ earlier investors both fully exited in 2014, allowing both companies to continue to pursue long-term strategies supported now by a diversified institutional investor base, benefiting all stakeholders. Both Deutsche Annington and GAGFAH have re-shaped their organisational structures and are investing significant amounts to address the mega trends of energy savings and the aging society. Together, the two companies will invest around EUR 500m in maintenance and modernising of its housing stock.
Deutsche Annington is advised by JP Morgan, Kempen & Co, Puhl GmbH & Co KG, Sullivan & Cromwell LLP. and CNC.
# # #
Contact:
Klaus Markus
Head of Corporate Communications
Phone: +49 234 314-1149
Thomas Eisenlohr
Head of Investor Relations
Phone: + 49 234 314 – 2384
About Deutsche Annington
Deutsche Annington is Germany’s leading private-sector residential real estate company both in terms of portfolio value and the number of units owned. The Portfolio of Deutsche Annington comprises around 210.000 residential units. The company is present throughout Germany. Deutsche Annington has its headquarters in Düsseldorf and employs more than 3,400 people.
Additional information:
Approval: Regulated Market / Prime Standard, Frankfurt Stock Exchange
ISIN: DE000A1ML7J1
WKN: A1ML7J
Common code 094567408
Registered office of Deutsche Annington: Münsterstrasse 248, 40470 Düsseldorf, Germany
Business address of Deutsche Annington: Philippstrasse 3, 44803 Bochum, Germany
Important information:
This press release is neither an offer to exchange nor a solicitation of an offer to exchange shares in GAGFAH S.A.. Moreover, the press release is neither an offer to purchase nor a solicitation to purchase shares in Deutsche Annington Immobilien SE. The final terms and further provisions regarding the public takeover offer will be disclosed in the offer document after the publication has been approved by the German Federal Financial Supervisory Authority ( Bundesanstalt für Finanzdienstleistungsaufsicht ). Furthermore, Deutsche Annington Immobilien SE reserves the right to deviate in the final terms of the public takeover offer from the basic information described herein. Investors and holders of shares in GAGFAH S.A. are strongly recommended to read the offer document and all documents in connection with the public takeover offer as soon as they are published, since they will contain important information.
Subject to the exceptions described in the offer document as well as any exemptions that may be granted by the relevant regulators, a public takeover offer will not be made directly or indirectly, in any jurisdiction where to do so would constitute a violation against the national laws of such jurisdiction.
The shares in Deutsche Annington Immobilien SE have not been nor will they be registered under the U.S. Securities Act of 1933 as amended or with any securities regulatory authority of a state or any other jurisdiction in the USA. Therefore, subject to certain exceptions, shares in Deutsche Annington Immobilien SE must not be offered or sold within the USA or any other jurisdiction where to do so would constitute a violation of the laws of such jurisdiction. There will be no registration of the shares in Deutsche Annington Immobilien SE mentioned herein pursuant to the relevant laws in the USA. If, in the opinion of Deutsche Annington Immobilien SE, the Deutsche Annington Shares may neither be offered nor transferred to a U.S. shareholder pursuant to the provisions of the U.S. Securities Act of 1933, such U.S. shareholder who has validly accepted the offer will, in lieu of the number of Deutsche Annington Shares to which he is entitled, receive a corresponding cash amount in Euro from the sale of the respective number of Deutsche Annington Shares.
To the extent permissible under applicable law or regulation, and in accordance with normal German market practice, Deutsche Annington Immobilien SE or its brokers may purchase, or conclude agreements to purchase, shares in GAGFAH S.A., directly or indirectly, out of the public takeover offer, before, during or after the period in which the offer remains open for acceptance. This applies to other securities which are directly convertible into, exchangeable for, or exercisable for shares in GAGFAH S.A. These purchases may be completed via the stock exchange at market prices or outside the stock exchange at negotiated conditions. Any information on such purchases will be disclosed as required by law or regulation in Germany or any other relevant jurisdiction.
If any announcements in this document contain forward-looking statements, such statements do not represent facts and are characterized by the words ‘will’, ‘expect’, ‘believe’, ‘estimate’, ‘intend’, ‘aim’, ‘assume’ or similar expressions. Such statements express the intentions, opinions or current expectations and assumptions of Deutsche Annington Immobilien SE and the persons acting together with Deutsche Annington Immobilien SE. Such forward-looking statements are based on current plans, estimates and forecasts which Deutsche Annington Immobilien SE and the persons acting together with Deutsche Annington Immobilien SE have made to the best of their knowledge, but which do not claim to be correct in the future. Forward-looking statements are subject to risks and uncertainties that are difficult to predict and usually cannot be influenced by Deutsche Annington Immobilien SE or the persons acting together with Deutsche Annington Immobilien SE. It should be kept in mind that the actual events or consequences may differ materially from those contained in or expressed by such forward-looking statements.
01.12.2014 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG.
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| Language: | English |
| Company: | Deutsche Annington Immobilien SE |
| Münsterstraße 248 | |
| 40470 Düsseldorf | |
| Germany | |
| Phone: | +49 234 314 2384 |
| Fax: | +49 234 314 888 2384 |
| E-mail: | [email protected] |
| Internet: | www.deutsche-annington.com |
| ISIN: | DE000A1ML7J1 |
| WKN: | A1ML7J |
| Indices: | MDAX |
| Listed: | Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr in Berlin, Düsseldorf, Hamburg, München, Stuttgart |
| End of News | DGAP News-Service |
| - - - |
| 300945 01.12.2014 |
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