Deutsche Wohnen AG and LEG Immobilien AG agree on business combination


  • Combination creates leading European residential real estate company with regional focus - and significant strengthening of position in Germany 
  • Focused combined portfolio with more than 90 % of the joint real estate portfolio by market value in Core+ and Core regions
  • Voluntary public tender offer by Deutsche Wohnen AG for all outstanding shares of LEG Immobilien AG
  • 33 Deutsche Wohnen shares offered in exchange for every 10 LEG shares, corresponding to a circa 13 percent premium in relation to LEG's closing price pre-announcement, and a circa 20 percent premium in relation to LEG's volume weighted average price over the last three months
  • Deutsche Wohnen and LEG have signed a Business Combination Agreement

Berlin and Dusseldorf, 20 September 2015. Deutsche Wohnen AG ("Deutsche Wohnen") and LEG Immobilien AG (“LEG”) combine their businesses to become a leading European residential real estate companies. The combined company will have around 250,000 residential units and a combined portfolio value of approximately EUR 17 billion. On the basis of resolutions by its Management Board and Supervisory Board today, Deutsche Wohnen will make a voluntary public tender offer to acquire all outstanding shares of LEG Immobilien AG. LEG's boards will support the offer and, subject to review of the offer document, recommend their shareholders to accept the offer. In order to implement the planned combination, both companies have signed a Business Combination Agreement. It addresses the common understanding in regards to strategy and structure of the combined company, the process of the combination, the future composition of the boards as well as the integration process. Deutsche Wohnen is also confirming to tenants and employees of LEG that it will fully comply with LEG’s existing social charter.

Ideal complement of portfolio, strengths and business philosophy

This business combination is a consistent step within an industry characterised by change, consolidation and growing competition for capital. Deutsche Wohnen and LEG combine two leading companies in the residential real estate sector with highly similar business philosophies. Both stand for an efficient and sustainable property management and a regionally focused and prosperous real estate portfolio which perfectly complements each other. Together, both companies will be strong in any macroeconomic environment, as the result of conservative gearing (LTV) of just 42 % (pro forma). Traditionally, Deutsche Wohnen and LEG equally stand for quality and value development of their respective portfolios. 

The strategy for the future is to maintain the conservative debt ratio and grow in the core regions. Accordingly, the combined company plans significant additional investment in its current portfolio. The overall aim is to strengthen the growth region North Rhine-Westphalia, whilst also developing new areas. The Dusseldorf premises, current headquarters of LEG, are to be expanded as a second mainstay of the combined company – in addition to the main hub in Berlin. In the future, the Dusseldorf premises will serve as the centre for Region West and administer the combined portfolios from Northern Germany to the Rhine-Main-Area.

Michael Zahn, CEO of Deutsche Wohnen, comments: "Both our companies set standards in the sector with our sustainable portfolio development and extensive operational experience. This is an excellent foundation to grow further together and expand our strong position in the European market."

Thomas Hegel, CEO of LEG, comments: “The combination is the next logical step as both companies pursue the same business philosophy and complement each other regionally very well. This creates a strong base for a successful joint future. We are convinced that under a single roof we will generate significant value added for shareholders, employees and for our tenants."

Combined portfolio with more than 90 % in Core+ and Core regions

LEG's portfolio is mainly situated in growth (Core+) and stable (Core) regions with focus on North Rhine-Westphalia. The combined company will be one of the largest and leading providers for residential property in those regions. For the combined company, the Core+ portfolio expands from approx. 123,000 to approx. 157,000 units mainly through additions in the Rhineland and Münsterland. The Core portfolio increases from approx. 16,000 to approx. 58,000 units.

Expected incremental earnings contribution of EUR 55 million p.a.

Following a successful completion of the combination of the two businesses, both companies are convinced that the business combination will realise income and cost synergies with a positive effect on combined FFO (excluding disposals) of around EUR 35 million before tax per year. These synergies derive from an efficient property management, economies of scale in purchasing and standardised corporate structures with a reduction in administrative costs. Deutsche Wohnen also expects that the business combination will increase the sustainable privatisation potential by around 1,500 units p.a., with an additional earnings contribution of approximately EUR 20 million before tax per year. An additional earnings contribution of around EUR 55 million before tax is anticipated for the combined group’s FFO (including disposals). 

The partners assume that these synergies can be fully realised, at the latest, four years after the business combination has been executed. The realisation comes with non-recurring associated integration costs of around EUR 30 million. As a result of the expected synergies and the attractive FFO return of LEG, Deutsche Wohnen anticipates that the business combination will generate FFO-growth (excluding disposals) per Deutsche Wohnen share in the low double-digit range. For reference, on a standalone-basis, Deutsche Wohnen estimates about EUR 330 million FFO for 2016 (without disposals and without further acquisitions). This combination of two financially strong companies also benefits from an optimised capital cost structure and an improved capital market profile.

Business Combination Agreement 

In a Business Combination Agreement, Deutsche Wohnen and LEG have determined the following central aspects relating to the combination of the two companies:

  • An integration committee will be responsible for the execution of the integration. The chairmen of the Management boards of both companies will be members of the committee. 
  • Two members of the current Management Board of LEG, Thomas Hegel and Eckhard Schultz, will become members of the Management Board of Deutsche Wohnen. The CEO of LEG, Thomas Hegel, will become Deputy CEO of Deutsche Wohnen.
  • The Deutsche Wohnen Supervisory Board, which currently consists of six members, will be expanded to include a further three individuals from the current LEG supervisory board. 
  • The operational management of the West German portfolio of the combined business will be run out of Dusseldorf and the East German portfolio out of Berlin. Holger Hentschel remains board member and COO of LEG and will be responsible for Region West as divisional director. 
Attractive offer for shareholders of both companies

The proposed tender offer provides for LEG shareholders to receive 33 Deutsche Wohnen shares for every 10 LEG shares held. This corresponds to an offer price of EUR 79.37 per LEG share (based on the respective closing price of Deutsche Wohnen) and accordingly a premium of circa 13 percent to the closing price of LEG pre-announcement, and a premium of circa 20 percent to the volume weighted average price of LEG during the last three months pre-announcement.

Based on the closing price of Deutsche Wohnen on the day before this announcement, the exchange ratio values the (undiluted) equity of LEG at EUR 4,6 billion. 

The new Deutsche Wohnen shareholders are entitled to participate in dividends from 1 January 2015. The guidance given for the dividend per share for 2015 is not affected by the combination.

After conclusion of the business combination and the tender of all LEG shares, the former Deutsche Wohnen shareholders would hold approximately 61 % of the shares, and the former LEG shareholders would hold around 39 % in the combined company. 

Michael Zahn, CEO of Deutsche Wohnen: "This business combination is extremely beneficial for both parties. Deutsche Wohnen is offering LEG shareholders a highly attractive premium. FFO increases by around 15 % for Deutsche Wohnen shareholders, with NAV per share remaining largely unchanged. The additional value creation will enable us to cover our financing requirements to a larger extend independently, and thereby realise the attractive growth prospects we envisage with this transaction even better. Furthermore, the combination creates additional dividend potential for our shareholders."

Thomas Hegel, CEO of LEG: “For our shareholders the value added of the transaction lies in a significant increase in NAV per share.”

In addition, LEG shareholders will benefit from higher portfolio shares in Core+ regions, among others.

The exchange offer will be implemented subject to customary preconditions for a transaction of this type and size. These conditions will be presented in the offer document and include, among others, the implementation of a capital increase in kind in order to create new shares for the exchange offer, and the attainment of a minimum acceptance threshold of 50 % plus one LEG share. Deutsche Wohnen will invite its shareholders to an Extraordinary General Meeting on 28 October 2015 to pass the resolution for the non-cash capital increase. The business combination is intended to be concluded by the end of December 2015 (subject to the entry of the resolution for the non-cash capital increase in the commercial register).

Further details about the tender offer will be part of the offer document to be submitted to the German Federal Financial Supervisory Authority (BaFin). Deutsche Wohnen anticipates that the offer document will be published after Deutsche Wohnen has held its Extraordinary General Meeting.

The offer is subject to approval of the offer document by BaFin, to the offer terms set out in the offer, and to approval by relevant anti-trust authorities. Following approval, the offer document will be made available online at


LEG Immobilien AG
Burkhard Sawazki
Head of Investor Relations
Phone: +49 211 45 68-204

LEG Immobilien AG
Jürgen Homeyer
Press Spokesman
Phone: +49 211 45 68-325
Mobile +49 152 53 08 54 66

About Deutsche Wohnen

Deutsche Wohnen is one of the largest publicly listed real estate companies in Germany and Europe with a business focus on managing and developing its portfolio, which focusses on residential properties. As at 30 June 2015, the portfolio comprised a total of 144,000 units, of which 141,900 are residential units and 2,100 are commercial properties. Deutsche Wohnen is listed in the Deutsche Börse’s MDAX and is included in the leading indices EPRA/NAREIT and GPR 100.

About LEG

With around 110,000 rental properties and approximately 300,000 tenants, LEG is one of Germany’s leading housing companies. It has a comprehensive presence in North Rhine-Westphalia with ten branches, 23 customer centres and approximately 100 tenant offices providing personal local services. LEG generated rental and letting income of around EUR 577 million in the 2014 financial year.

Important information

This announcement is neither an offer to exchange nor a solicitation of an offer to exchange shares in LEG Immobilien AG. Moreover, the announcement is neither an offer to purchase nor a solicitation to purchase shares in Deutsche Wohnen AG. 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 Wohnen AG 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 LEG Immobilien AG 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 or into the USA or any other jurisdiction where to do so would constitute a violation of the laws of such jurisdiction. The takeover offer will be carried out under exclusion of the use of the mails or any other means or instruments of interstate or foreign commerce (inter alia, transmission by facsimile, telephone or internet) in the USA and under exclusion of any facility of a national securities exchange of the USA. Accordingly, the sending or any other distribution of this announcement or any other accompanying document by mail, their forwarding or transmission in or into the USA is not permitted. 

The shares in Deutsche Wohnen AG 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 Wohnen AG 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 Wohnen AG mentioned herein pursuant to the relevant laws in the USA. There will be no public offering in the USA. Subject to certain exceptions, shares in Deutsche Wohnen AG must not be sold, or offered, to persons in the USA. 

To the extent permissible under applicable law or regulation, and in accordance with normal German market practice, Deutsche Wohnen AG or its brokers may purchase, or conclude agreements to purchase, shares in LEG Immobilien AG, 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 LEG Immobilien AG. 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 Wohnen AG and the persons acting together with Deutsche Wohnen AG. Such forward-looking statements are based on current plans, estimates and forecasts which Deutsche Wohnen AG and the persons acting together with Deutsche Wohnen AG 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 Wohnen AG or the persons acting together with Deutsche Wohnen AG. 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.

Your Contact

Phone.: +49 (0) 211 4568 0
Fax: +49 (0) 211 4568 261

Your Contact

Phone.: +49 (0) 211 4568 388
Fax: +49 (0) 211 4568 500

Human Resources
Your Contact

Phone.: +49 (0) 211 4568 344
Fax: +49 (0) 211 4568 261