TLG Immobilien : ACQUIRED 9.99% STAKE IN AROUNDTOWN; COMPANIES START EVALUATION OF A POTENTIAL MERGER

TLG ACQUIRED 9.99% STAKE IN AROUNDTOWN; COMPANIES START EVALUATION OF A POTENTIAL MERGER

• TLG acquired a 9.99% stake in Aroundtown from Avisco, valuing Aroundtown at EPRA NAV as of 30 June 2019 and entered into an option agreement for a further stake of up to 4.99% at the same price
• TLG and Aroundtown to commence evaluation of a potential subsequent merger between the two companies; Avisco supportive of such merger
• Combination of TLG and Aroundtown to create leading European commercial real estate company, with primary focus on offices and hotels in top tier cities of Germany and the Netherlands
• Aroundtown welcomes TLG as a new investor; TLG intends to seek representation on the Board of Directors of Aroundtown

Berlin, 1 September 2019 - TLG Immobilien AG ('TLG') (ISIN: DE000A12B8Z4) purchased a 9.99% stake in the share capital of Aroundtown SA ('Aroundtown') from Avisco Group ('Avisco'), the largest shareholder of Aroundtown, for EUR1,016 million (the 'Stake Purchase'). The price agreed for the Stake Purchase values Aroundtown at EUR8.3 per share (the 'Purchase Price'), which corresponds to the EPRA NAV of Aroundtown as of 30 June 2019. The Stake Purchase is accretive to the FFO per share of TLG from day 1.

In addition, TLG and Avisco have entered into an option agreement pursuant to which TLG has a call right to purchase from Avisco, and Avisco has a put right to sell to TLG, another stake of up to 4.99% in the share capital of Aroundtown (the 'Option'). In the case of the full exercise of the Option, TLG's shareholding in Aroundtown would increase from 9.99% to 14.99%, making it the largest shareholder in Aroundtown. The price per share of the Option is equivalent to the Purchase Price of the Stake Purchase. The Option is exercisable by either party prior to 28 February 2020, subject to certain conditions precedent, including receipt of merger control clearance.
As part of the transaction, each of TLG and Avisco have agreed to a lock-up of shares representing 9.99% in Aroundtown (based on the current share capital) until the earlier of 31 August 2020 or a potential merger between TLG and Aroundtown. Avisco supports the potential merger between TLG and Aroundtown.

Sascha Hettrich, FRICS, chairman of the supervisory board of TLG, said: 'Whilst there are various ways to grow a company, the best is to combine forces with leading market players in the same field. Therefore, our strategy was to look for the industry partner who ideally fits with TLG, which has led to the acquisition of an initial 9.99% stake in Aroundtown and an option to further increase the stake up to 14.99%. We welcome working with Aroundtown towards a future merger of the two companies and creating one of the largest commercial real estate firms in Europe with a focus on top tier cities in Germany and the Netherlands.'

Avisco said: 'Today's announcement is the first step to enable the potential creation of a pan-European commercial real estate market leader, focused on Germany and the Netherlands and geared towards offices and hotel, which are the most attractive segments in commercial real estate. We are excited about the prospects of the potential combination and support the leadership teams of both TLG and Aroundtown in their forthcoming discussions.'

Intention of TLG and Aroundtown
Building upon today's announcement, TLG intends to seek representation on the Board of Directors of Aroundtown, commensurate with its shareholding in Aroundtown, as soon as possible. Aroundtown welcomes TLG as an investor in the company. TLG and Aroundtown intend to commence discussions in relation to a potential merger to the benefit of both companies and their shareholders. TLG intends to act as offeror (at an exchange ratio guided by the then prevailing EPRA NAV of the two companies, subject to market conditions and mutual due diligence), or effect a different form of business combination as mutually agreed between the parties.

A merger between TLG and Aroundtown would create a market leading, pan-European commercial real estate company with a gross asset value (GAV) in excess of EUR25 billion. The combined portfolio would primarily comprise of office buildings and hotels in the top tier cities of Germany and the Netherlands and, as such, be geared towards some of the most attractive segments in commercial real estate. The combined company would benefit from a solid capital structure and tangible value creation potential from operating and financing synergies and result in significant FFO accretion per share. Together, the two companies would be better placed to lever the joint development potential across the enlarged footprint and capitalise on value-enhancing acquisition opportunities. The potential merger would significantly increase the free float, liquidity and index weighting of the combined company with a wider, more diversified shareholder base.

UBS is acting as financial adviser and Sullivan & Cromwell as legal adviser to TLG in conjunction with this transaction.

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