Germany’s largest landlord Vonovia and Deutsche Wohnen are allowed to merge, the Federal Cartel Office has now approved the planned merger. “The joint market shares of the companies do not justify a prohibition under competition law,” says the president of the authorities, Andreas Mundt. And that although he knew that “two heavyweights on the German housing market” would come together.
Vonovia actually rents more than 350,000 apartments in local conurbations, for example in the Ruhr area, Dresden or the Rhine-Main area. Deutsche Wohnen owns a good 150,000 units, most of them in Berlin. Many of the properties were once built as part of municipal or non-profit housing, but have been privatized. Both companies have been benefiting from the move to large cities for years – combined with a new building that was initially barely able to keep up. Vonovia and Deutsche Wohnen have been able to increase rents in many places, and their properties have risen sharply in value.
The Cartel Office has now “carefully examined” various regional markets, according to Mundt. A focus has been placed on two- to three-room apartments with a basic rent of up to seven euros per square meter. But even in this segment Vonovia and Deutsche Wohnen only have a combined market share of a good 20 percent in Dresden and less than 20 percent in Berlin. “In other cities and in other market segments, the joint market shares are consistently lower,” says Mundt. Therefore, the merger is not expected to have a significant negative impact on competition.
The background is the fragmented housing market: In addition to real estate groups, there are still many municipal housing companies, private landlords and housing cooperatives in Germany. They will all “continue to limit” Vonovia’s room for maneuver, argues the Cartel Office.
The former Deutsche Annington announced at the end of May that it wanted to take over its competitor Deutsche Wohnen. Its shareholders can decide until July 21 whether they want to sell their shares for 52 euros per share. If at least half of all shares are tendered, Vonovia intends to complete the takeover by the end of August. The management board and supervisory board of Deutsche Wohnen want to support the merger.
Vonovia shares fell slightly on the stock exchange on Monday. Deutsche Wohnen’s share price has been quoted just below the offer price of EUR 52 since the beginning of June; apparently most investors assume that the merger is likely to take place.